Bailout Blues: Is Fiat giving up on Chrysler by canceling EVs?

You have to give Don Marchionne some credit.

After taking up a whole day last week spinning fairy tales about Chrysler’s vacuous five-year plans, canceling his U.S. arm’s non-existent electric-vehicle was a fresh piece of down-to-Earth decision-making.

But does this decision say more about Fiat's plans for Chrysler than the 7-hour PowerPoint presentation we received last week?

It’s one thing for Fiat/Chrysler head Marchionne to spin us on the doubling of global sales (including a 33 per cent increase here in Canada.)

With aging, unattractive and market-inappropriate products, bottom-of-the-barrel dismal quality ratings, a bare product development cupboard, and few North American resources on hand, I’d bet on the Leafs winning the Cup before any of The Don’s bold predictions comes true.

But what about the canning of Chrysler’s ENVI program?

On one hand, it makes a bunch of business sense.

If you remember, the quickee concepts (like the Dodge Circuit above) were little more than vapourware
—with engineering specs cut-and-paste from GM’s Volt program.

But  the EVs did serve the purpose of nailing down billions in Canadian and U.S. taxpayer bailout money. The Don’s argument is that the Fiat 500 will replace the EVs as Chrysler’s high-mileage vehicle that the government funds were directed towards the EVs.

But is that enough?

Is the canceling of the EVs just another sign in the lack of Fiat’s long-term commitment?

Or is The Don only admitting what no one wants to hear: That EVs are a waste of time?

Bailout Blues: Can Fiat keep Chrysler’s lights on to see through its Five Year Plan?

We waited five months and seven hours for this?

After an all-day press conference, Chrysler’s new Italian caretakers, Fiat, came through with little—if anything—that makes me change my mind that this enterprise isn’t going to make it to 2012, the year when reskinned Fiats will start selling in Chrysler showrooms. Maybe.

Except for the no-news of any plans for North American Alfa Romeos, the product plan varies little than what was leaked last week.

The Plan calls for deep-sixing next year the PT Cruiser and Jeep Commander, and the Dodge Dakota in 2011—something consumers have already effectively done, what with Chrysler’s U.S. sales off 30 per cent last month.

But the cars that no one is buying today—like the Sebring, Avenger, Caliber, etc.—will be gathering dust in Chrysler dealerships for another three years until their respective Fiat replacements come to the rescue.

So how in the name of Lee Iacocca does Fiat keep Chrysler in business until then?

The reality is, Chrysler is still in deep doo-doo. It’s still stuck trying to sell the low-quality, unattractive and getting-older-by-the-day products that currently no one’s buying.

Except for the niche Fiat 500 (that’s coming next year as a Chrysler) consumers will have no compelling reason to visit a Chrysler/Dodge/Jeep showrooms until 2012, expect for refreshed 300 and Charger sedans and a new Grand Cherokee and Durango—not exactly the types of products that are selling, n’est pas?

And then what? By then, Chrysler will be even further behind the competition.

Rivals will have jumped into the small car market (Ford Fiesta, Focus, C-Max, Mazda2, Chevrolet Spark, Aveo, Cruze, etc.) that the reskinned Fiats hope to compete in.

Even if customers suddenly flock to the Chrysler-badged Fiats, realistically, it will take at least a full generation of product (eight years) to win people back.

So, does Fiat have deep enough pockets to keep Chrysler afloat until 2020?

Here’s a hint: Google “Renault” and “AMC” for your answer.

Bailout Blues: GM says to Magna, No Opel for you

So, it looks like Opels aren't going to be built in Canada afterall. Hey, not that I'm one to say I told you so. But…

Look, like I’ve said since the start of this soap opera back last spring, there was little chance that Canadian auto parts magnate Frank Stronach's Magna and his Russian friends—or Fiat or whoever else was sniffing around—were ever going to get their hands on Government Motors’ crown jewels.

GM never really wanted to get rid of Opel. It was being forced into it because of its dire financial situation. If GM is serious about being a global automaker (i.e. NOT like Chrysler), they really don't have much choice but to keep Opel.

And just so you conspiracy theorists out there get any ideas, the U.S. Treasury (the majority shareholder in GM these days) is officially denying that the Obama administration had anything to do with GM’s decision.

Right. And if you believe that, they also have a bunch of empty Saturn stores they'd like to sell you, as well...

Anyway, this doesn’t mean its blue skies and sunshine for Opel going forward.

GM could still send Opel into bankruptcy. Ditch a lot of debt and manufacturing costs and Opel may (may!) be very profitable. Otherwise, it’ll continue to be a money pit.

Do you think this was the smart thing for GM to do?

Or do think Magna would have done a better job in making struggling Opel a success?

Bailout Blues: Fiat’s Five Year Plan for Chrysler sees less Chryslers

One week before Don Marchionne’s planned six-hour dog and pony show on what we can expect from the Chrysler/Dodge/Jeep/Ram/Fiat/Alfa Romeo North American product portfolio over the next five years, the Wall Street Journal has leaked some alleged details.

First off, it looks like Alfa Romeo is going to replace Chrysler.

To no one's surprise, the PT Cruiser and Sebring sedan are toast. Leaving the Town & Country minivan, redesigned 2011 300 sedan, and a Chrysler-badged Fiat 500 super mini.

Dodge has already lost its trucks (the Ram brand was spun recently spun off.) It will also lose the Caliber, Nitro, and Grand Caravan. The redesigned 2011 Charger, Challenger and Journey soldier on.

Jeep seems to be going back to its roots. The Commander, Compass and Patriot will be deep-sixed. Only the Wrangler and the new 2011 Grand Cherokee survive.

Potentially leaving the best for last, it looks like Alfa Romeo will be Fiat’s big shot in North America.

Incoming are the Fiat 500-based Mito supermini, Milano compact, a new midsize sedan and the over-$200,000 8C Competizione. Seriously.

So, what do you think of The Don’s plans?

Can Alfa make a successful return to North America as a full-fledged brand?

Would you buy a Chrysler Cinquecento?

[Source: Wall Street Journal]

Bailout Blues: Can Saab be salvaged by going upmarket?

Compared to its luxury-sport rivals like BMW, Mercedes-Benz or Audi, Saabs have always felt a bit overpriced, right?

But according to a Swedish newspaper, that hasn’t been the problem at all. In fact, its new owners want to double the average selling price of a Saab by 2016.

As part of the super car maker Koenigsegg Group’s business plans to grab a 600 million Euro loan to takeover Saab from Government Motors, the goal is to establish Saab at the upper end of the market. Way up.

The plan calls for a break even financial situation by 2011 with global sales of 115,000. Then, by 2016, sales of only 65,000, but at twice the average price of what you pay for a Saab today.

How, pray tell?

Part of the plan is to have an all-electric 9-3 by 2012, as well as hybrid versions of the 9-3 and 9-5.

All for the low, low investment of 600 million Euros, I guess.

So, over to you….

Do you think the Saab brand can go up market?

Would you buy a 9-5 Koenigsegg Edition for close to twice the current car’s price, say, about $100,000?

[Source: Dagens Industri via TTAC]

Bailout Blues: Magna’s Opel Interruptus

I optimistically thought that by the time I got back from being out of the country for a week, the whole Magna/Opel/Government Motors soap opera would be signed, sealed and delivered

But nooo…

Just to recap: Under a deal that had been expected to be signed last week GM plans to sell a 55 per cent stake in its struggling European Opel operations to Canadian-owned Magna and Russian state-owned lender Sberbank.

GM would retain a 35 per cent stake in Opel under the deal, and autoworkers would hold the remaining 10 per cent.

But now, it looks like European Union politicos are waking up and smelling the stinky roses of this deal.

The European Commission announced late Friday that it had doubts about Germany's offer to provide 4.5 billion euros ($6.95 billion Cdn.) in aid for Opel as part of the deal with Magna.

It’s concerned that “significant indications" that Germany had made the aid to Opel contingent on Magna being chosen as the winning bidder, a strategy that is contrary to EU competition rules.

Since this sad soap opera has been going on since last spring—which also saw Italy’s Fiat and China's Beijing Automotive Industry Corp. come and go as potential Opel suitors— why this issue is only being addressed now is beyond me.

Is it because, in the end, GM has no intention of letting go of Opel, and all of the associated technologies and engineering resources?

The Wall Street Journal thinks so

It cited “people familiar with the matter” that GM is “ready to keep control” of Opel if the EU blocks the sale to Magna, a strategy that, actually, makes a lot of sense for GM.

The big question is: Can GM find the money to go it alone?

Its former sugar daddy, Belgian investor RHJ International has moved on.

Do I smell even more government money than the $4.5B Euros heading GM’s way?

[Sources: Automotive News, Wall Street Journal]

Bailout Blues: Where does Fiat’s Chrysler go from here?

New car sales may not be all that bad here in Canada. But what if you’re a Canadian in the business of making cars for Americans?

As predictable as the leaves turning in October, hey, guess what? Americans stopped buying new cars when the U.S. government Cash for Clunkers incentives dried up.

Go figure.

And amidst this pile of bad news, my biggest concern is Fiat’s just-acquired Chrysler Group.

Although Chrysler/Dodge/Jeep’s 42 per cent drop in U.S. year-to-year sales couldn’t match Government Motors’ 45 per cent plummet, the new Fiat entity’s lack of new product this year, and for next the few years, should have Ontario Chrysler autoworkers in Windsor and Brampton worried.

Why?

Try this: Dodge Caravan's U.S. sales off 63 per cent. Town and Country, minus 61 per cent.

Year-to-date, only the, Jeep Wrangler, Dodge Journey, Ram and Challenger have not dropped by more than 30 per cent. That's the extent of the good news. And there’s nothing in the product pipeline that looks to change this scenario.

In fact Chrysler had to cancel a planned "What’s new for 2010” media this summer. Except for updated Dodge heavy duty pickups, there’s nothing fresh in the pantry until the 2011 Jeep Grand Cherokee/Dodge Durango SUVs and Chrysler 300/Dodge Charger full-size sedans arrive sometime next year.

Not exactly the types of products consumers are clamouring for these days, non?

And don't get me started about the automaker's botched family car program.

So where does Chrysler go from here?

A year from now, will it end up in the same fate as GM's Saturn, Saab or Hummer?

[Source: PR Newswire]

Bailout Blues: Do Sebring and Avenger deserve stay of execution?

Was anyone surprised that former Chrysler babysitters Cerberus had planned to kill the not-so-dynamic mid-size sedan Chrysler Sebring and Dodge Avenger duo after the 2010 model year?

I mean come on. Within a segment chock-a-block with Camrys, Accords, Mazda6s, Malibus and Fusions, these two bottom feeders consistently finish dead last or at the back of the pack—take your pick.

But, apparently, someone forgot to tell current Chrysler caretaker Fiat’s CEO, Sergio “Don” Marchionne, about these plans.

At this month’s Frankfurt show, Marchionne was "surprised" at how little product development was going on over at Chrysler the past 24 months; i.e. no Sebring/Avenger replacement anywhere in sight.

“Surprised?” I guess the words “due diligence” doesn’t translate to well into Fiatspeak…

Anyhoo… Now that the Don is faced with the prospect of NOT having any product in one of the U.S. market’s biggest segments, he’s decided to give the woeful Chrysler sedan twins a stay of execution. At least until the mythical Fiat-based replacements arrive in about two years (at the earliest), or the Don manages to parcel off Chrysler’s bits. Whichever comes first.

Know this, though. Through August, Sebring and Avenger U.S. sales totaled 40,452—compared with 238,612 for the Camry, the mid-sized segment leader.

So, over to you: Do you think the Sebring and Avenger deserve to live on?

Or is Fiat better off Dr. Kevorkianing these two losers now?

[Sources: AutoWeek, CNN Money]

Bailout Blues: Buick wants to get small

Are you in the market for a BMW 1 Series or Audi A3? What about a Volvo C30 or Acura CSX?

If so, Government Motors almost-but-not-quite-as-luxurious-as-Cadillac brand, Buick, is seriously looking at jumping into the premium compact shark pool.

Dubbed the Buick Avant (Audi lawyers are on the case as we speak), the concept sports doors that can both swing and slide open, a driver's seat that moves laterally to customize interior packaging, and a luggage shelf that brings packages to you.

GM’s marketing budget is tight these days. So in lieu of expensive focus groups (do you know how much egg salad sandwiches cost these days?), by clicking here, they want you to let them know what you think about the Avant (seen in the video below) and the six exterior and four interior designs they also came up with.

Like Toyota’s Bimmer-hunting Lexus LF-Ch from last week’s Frankfurt show, or Ford's Lincoln Concept C from last January's Detroit shindig, Buick wants a piece of the one of the only growing segments these days: pricey small cars.

Do you buy into the idea of a premium compact from the GM’s Roadmaster brand?

Do you think GM can get existing BMW and Audi (and VW and Volvo and Acura)  customers out of their compacts and into something with portholes?

And shouldn't Cadillac be going after these brands?

[Source: GM Lab]

Magna cum Opel: The Fat Lady’s only warming up in the Opel Magna deal

So, Frank’s finally been admitted into The Club, eh?

While the media is ready to crown his Magna's Russian-backed deal to takeover Opel as Canada’s first modern automaker, I’d keep the champagne on ice for awhile:

• This seems to be a political decision rather than an economic one. Magna wasn’t Government Motors first choice. GM was GM’s first choice. Opel is the core of GM’s passenger car engineering, and the automaker was scraping every barrel and looking under every seat cushion to drum up enough pennies to keep its European arm.

In the end, though, GM realized that they don’t have enough money to hold on to Opel. And the German government was not going to give the estimated $6 billion needed to keep Opel running to the GM-backed RHJ bid.

So despite the song and dance routine GM has putting everyone through the past little while, GM was left with only two options: close Opel down or lob it off to Magna. For now…

• Then there are the unknown “conditions” GM has put in place before it hands over Opel, lock, stock and smoking factories.

Like, say, a written confirmation that Opel workers “will support the necessary cost adjustments” (i.e., big pay cuts.) Or, perhaps, maybe, a bailout plan from a German government that still needs to go through a national election on September 27.

Whether Magna can fulfill these conditions won’t be known until after the elections.

• Then, finally, Frank needs to make Opel work. Which is a whole different kettle of fish. I mean, Opel wasn’t exactly knocking the lights out in sales before this circus started. So it’s going to take a lot of cash and a lot of time.

Optimists in Magna’s camp bleat on about the potential in the European and Russian markets and access to GM’s technology.

Cynics (yours truly included) see some existing Magna parts customers (the whole Volkswagen Group, for example) may be (you think?) a bit reluctant working with a company that is now both a supplier and a competitor.

Does Frank have the stomach and the wallet to play with the big boys now?