Article published January 08, 2009
Chrysler unlikely to survive '09, analysts say
Maker of Jeeps falls to 11 percent market share
ASSOCIATED PRESS
DETROIT - Even by the standards of battered automakers, Chrysler LLC is in dire shape.
Its sales in December were down 53 percent, far worse than Ford Motor Co. or General Motors Corp. Analysts say it probably won't survive the year as an independent company, despite $4 billion in government loans and the possibility of more.
The situation was so bad last year that a single Toyota Motor Co. model, the Camry/Solara midsize car, outsold the entire fleet of Chrysler passenger cars.
"Basically, they're done," said Aaron Bragman, an auto analyst with the consulting company IHS Global Insight in Troy, Mich. "There is no real possibility of turning this thing around as an independent company, in my opinion."
U.S. sales of Chrysler, Dodge, and Jeep brand vehicles fell 30 percent last year, the worst decline of any major automaker. Chrysler lost more market share than any of its peers, down to 11 percent. Analysts say most of Chrysler's products, especially its cars, don't look as good or drive as well as the competition's.
Chrysler plans to introduce an electric car in 2010, but until then, it has few promising models. Many analysts predict that by 2010, Chrysler will be acquired by another automaker or sold in pieces by its majority owner, New York private equity firm Cerberus Capital Management LP.Chrysler's chief financial officer has said the company needs $7 billion every 45 days to pay parts suppliers, and analysts question whether the company's sales are generating enough cash to make those payments.
Analysts also say an acquisition by GM is still possible. The two companies discussed it late last year before GM backed away to focus on its own cash issues.
Jonathan Macey, a Yale University law professor who has been critical of U.S. automakers' management, said Chrysler's sales numbers are "further evidence of an unviable entity."
When automakers went to Washington late last year, their aim was to get enough money to become viable again. They wound up with only enough help from the Bush Administration to get them through March, when Barack Obama will be in office and might provide more aid.
Mr. Macey, author of a book on corporate governance, said it's too late for Chrysler and GM to solve their problems, including high labor costs and union work rules that hinder competitiveness.
To get the loans, GM and Chrysler had to agree to negotiate concessions from creditors and the United Auto Workers, but the specifics have yet to be worked out. The government can call in the loans March 31.
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