General Motors and Ford have viable reorganization plans in place, provided Congress authorizes billions of dollars in loans to help them survive the severe economic downturn, but Chrysler’s demise is all but inevitable regardless of whether it receives government aid, a forecasting firm said Wednesday.
Chrysler, which this month warned that it could soon run out of money without a $7 billion loan, “doesn’t really have the scale, at least in most vehicle lines, that is really required to survive in this market,” said Michael Robinet, the vice president for global forecasting for the firm, CSM Worldwide. Mr. Robinet said that Chrysler, the smallest of the three Detroit automakers, had several unique and therefore valuable platforms, including its minivans and some Jeep models, but that sales of most vehicles were too low.
The company, which cut a quarter of its white-collar work force last month through a buyout and an early retirement program, no longer has the resources to be competitive, he said. He predicted a “controlled wind-down” in Chrysler’s operations over the next several years. The outlook is better for G.M., which has requested $18 billion in loans, and Ford, which says it is healthy enough to survive without help unless the economy worsens or a rival’s failure disrupts the availability of parts. But they and foreign-based manufacturers like Toyota and Honda still face more months of grim sales as a result of weak consumer confidence and tight credit. CSM estimates that automakers will sell 11.5 million vehicles in the United States next year, well below even this year’s dismal sales. Through November, the industry had sold about 12.3 million cars and trucks. In 2007, automakers sold more than 16 million vehicles.
“We haven’t seen those numbers for the better part of four decades,” Mr. Robinet said. Sales are falling globally as well, and CSM is projecting a 10 percent decline in 2009 from this year. But even in these gloomy times, CSM says G.M. and Ford have identified reasonable paths toward returning to profitability, contrary to assertions by some members of Congress. “If they do get the bridge loans, we think that maybe with the exception of Chrysler, we think that their plan is viable,” Craig Cather, the founder and chief executive of CSM, told members of the Automotive Press Association. CSM provides automotive consulting services and industry forecasts to 85 percent of the world’s automakers and suppliers. The best case for Chrysler, Mr. Cather said, would be a merger with a foreign automaker, perhaps a Chinese manufacturer, but the most likely outcome would be to sell it off in parts.
He said that Chrysler’s former owner, Daimler, “starved Chrysler of the investments they needed to make” and that the “drastic actions” taken by its current owner, the private equity firm Cerberus Capital Management, were not enough to save it. Chrysler, in a statement late Wednesday, said that it would not comment on speculation about its future and that it was focused on its request for federal aid and its turnaround plan.
Source: The New York Times