Blog: Dave LeggettChrysler rolled into GM?

Dave Leggett | 15 April 2009

While conducting my regular sweep of the emails and several gazillion websites this morning something stood out. A site that goes by the name breakingviews.com runs analysis pieces that I have noticed are really rather good. I recall a bloke leaving Reuters that I met in Frankfurt for a beer eons ago, who was joining them in start-up days and he was no mug.

Now, let's get this straight. We have some great analysts and journalists who originate material for just-auto. I don't think too many people would argue with that. But that doesn't mean we don't occasionally see something worthy elsewhere. And in that spirit, I got in touch and they were cool about us republishing the article concerned on just-auto.

Anyway, what I particularly liked about the article was a refreshing 'let's just stand back and look at the fundamentals' quality it has. Detroit is set up to make more cars than are now required in North America. Many more, even after the 'downsizing'. The debate in the coming weeks will intensify over how to deal with that. Obama's guys tasked with looking at the mess on behalf of taxpayers aren't car guys. And that's the point. Car guys are partly responsible for the mess as it is. With a fair wind, Wagoner et al might have just about got there, but the wind lately has been anything but.

Chrysler's situation is looking particularly desperate. Is Fiat's Marchionne a shrewd player? You betcha. He's probably got several scenarios mapped out on a spreadsheet (actually no, he'd have a notebook with scribbles) and picking up some pieces post-bankruptcy might well be one of them. And he seems adept at working the press in the current flux.

What should US policymakers do? Is it time to call time on Chrysler and take the pain of drastic immediate adjustment rather than long-term potentially dysfunctional decline as a semi-independent entity joined at the hip to Fiat (or, indeed, someone else)? Phew, that's a tough call.

But as the article from Antony Currie and Bob Fox at breakingviews suggests, that scenario in which Chrysler is effectively rolled into GM (on the table not so long ago you may recall) might actually have some upsides for some.  

As I was saying to a colleague earlier today, there's plenty of grief ahead as this industry continues to adjust to radically changed markets and economic conditions. Can we carry on as before? For all of us, the answer is, unfortunately, no.

COMMENT: Fundamental problem


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