Chrysler More Expendable than GM
As the economy continues to sour, the automakers continue to run up huge losses. Declining automotive unemployment is unavoidable in the near term, so I'd like to argue that we will get the most bang for our buck by propping up General Motors and letting Chrysler go. There are three basic reasons: size, quality, and impact on the stock market.
Size: GM employs 252,000 worldwide. Chrysler employs 58,000 worldwide and, sad to say, more jobs than that will be lost in the U.S. industry alone. Chrysler's employees deserves bailouts, but Chrysler itself is no longer too big to fail. If Fiat wants to pick up some of the pieces, that would be just fine.
Quality: Consumer Reports just came out with its annual Auto Issue, showing just how bad Chrysler is. For CR to recommend a car, it must perform reasonably well in tests and have at least average reliability. Not a single one of Chrysler's 22 models is recommended. General Motors is not much better, as only 17% of its vehicles are recommended by Consumer Reports. However, the two companies' overall report card scores are farther apart than you'd expect on the basis of the percentage recommended. Chrysler, at 48, is far behind GM's 57, compared with top-rated Honda's 78.
Stock market: Because Chrysler is privately held, its bankruptcy would not affect anyone's mutual funds or retirement savings (though it would obviously affect its own employees' retirement). The owners, Cerebrus, can afford to lose the money. GM, of course, is a very widely held company, so if it can return to health it will help a lot of people beyond the company.
Bottom line: Neither pre-Daimler Chrysler, Daimler-Benz, nor Cerebrus has been able to return Chrysler to profitability, so it's time to pull the plug. There's no point in an unsalvageable company taking sales away from companies that aren't dead yet.
Size: GM employs 252,000 worldwide. Chrysler employs 58,000 worldwide and, sad to say, more jobs than that will be lost in the U.S. industry alone. Chrysler's employees deserves bailouts, but Chrysler itself is no longer too big to fail. If Fiat wants to pick up some of the pieces, that would be just fine.
Quality: Consumer Reports just came out with its annual Auto Issue, showing just how bad Chrysler is. For CR to recommend a car, it must perform reasonably well in tests and have at least average reliability. Not a single one of Chrysler's 22 models is recommended. General Motors is not much better, as only 17% of its vehicles are recommended by Consumer Reports. However, the two companies' overall report card scores are farther apart than you'd expect on the basis of the percentage recommended. Chrysler, at 48, is far behind GM's 57, compared with top-rated Honda's 78.
Stock market: Because Chrysler is privately held, its bankruptcy would not affect anyone's mutual funds or retirement savings (though it would obviously affect its own employees' retirement). The owners, Cerebrus, can afford to lose the money. GM, of course, is a very widely held company, so if it can return to health it will help a lot of people beyond the company.
Bottom line: Neither pre-Daimler Chrysler, Daimler-Benz, nor Cerebrus has been able to return Chrysler to profitability, so it's time to pull the plug. There's no point in an unsalvageable company taking sales away from companies that aren't dead yet.
