And Chrysler and Jeep, too:

The Treasury Department said on Thursday it reached an agreement to sell its remaining 6 percent equity stake in Chrysler to Italy’s Fiat in a deal that will net Washington $560 million.

The proceeds of the deal include the sale of the government’s interest in a UAW retiree trust, Treasury said in a mid-evening statement.

Fiat agreed to pay Treasury $500 million for Treasury’s 98,461 shares of Chrysler. Treasury also had an option to buy shares held by the UAW retiree trust and Fiat agreed to buy that for $75 million — with Treasury to get $60 million and the government of Canada $15 million.

This gives Fiat what they wanted most: majority control of Chrysler Group. The 6 percent being retrieved from Treasury will push Fiat’s interest to 52 percent.

The government — and, by extension, taxpayers — took a short bath, or maybe a shower, on this deal:

The Obama administration invested $12.5 billion in Chrysler under the Troubled Asset Relief Program during the 2007-2009 financial crisis and said that, after the transaction, Chrysler will have returned more than $11.2 billion of that amount.

“Treasury is unlikely to fully recover the difference of $1.3 billion,” the statement said.

Of course, compared to the current Federal budget, or lack thereof, $1.3 billion is basically a rounding error.

And Fiat still has to contend with the second-largest shareholder, the VEBA fund of the United Auto Workers, upon which a substantial chunk of Chrysler — currently 45.7 percent — was bestowed by the bankruptcy court.

From the Chrysler Group blog, a week or so ago:

This morning an inappropriate comment was issued from the Chrysler brand Twitter handle, @ChryslerAutos, via our social media agency of record, New Media Strategies (NMS). After further investigation, it was discovered that the statement was issued by an NMS employee, who has since been terminated.

Chrysler Group and its brands do not tolerate inappropriate language or behavior, and apologize to anyone who may have been offended by this communication.

The culprit now contends that it was a problem with TweetDeck:

Tweetdeck was to blame for the word “f*cking” being sent out through the official Chrysler Twitter account, the person responsible has claimed.

The lawyer acting for Scott Bartosiewicz, who lost his job at New Media Strategy, the former social media agency for Chrysler, after he tweeted “I find it ironic that Detroit is known as the #motorcity and yet no one here knows how to f*cking drive,” has claimed it was due to Tweetdeck that the tweet was sent through the wrong feed.

Um, no. After the jump, I’ll show you why:

Read the rest of this entry »

The Truth About Cars quotes Automotive News:

Chrysler is considering bringing a Fiat-engineered subcompact sedan from Serbia to North America under the Chrysler brand. The Chrysler brand product plan, unveiled in November, called for a Fiat-derived subcompact sedan to be imported in 2013. The vehicle would be built in Kragujevac, Serbia, where Serbian automaker Zastava Automobili once made the Yugo.

And by “once,” they mean “until November 2008,” when Fiat, now 70-percent owner of Zastava, finally killed it off. Last I heard, the only car being built in Yugoville was the Fiat Punto Classic, a 2003 design elsewhere superseded by the current Grande Punto, which I might have thought was a better bet for the States.

Still, if Fiat has any intention of taking Chrysler upmarket, this might backfire as badly as an original 1980s Yugo.

That’s the opening line of a four-page Chrysler ad in Entertainment Weekly, and it caught me off-guard in several ways, not least of which is the fact that it’s printed in centerfold orientation — turn left edge of magazine to top, or turn head — despite not actually being a centerfold.

In various fonts, you read this:

It wasn’t too long ago, America had it. Looking and feeling like a million bucks was practically our birthright.

We didn’t race from A to B. We cruised.

Going for a drive was a Big Deal.

People took notice.

We turned heads.

And when we arrived somewhere, we arrived in style.

This would probably have carried more weight if they’d promised, up front, to euthanize the hideous Sebring at the first available opportunity, but their point is undeniable: the roads (and the parking lots!) are jam-packed with clonemobiles.

Then there’s this, on page four:

Let’s design cars people want to make out in again.

Did anyone ever make out in a Chrysler? I remember Harry and Sue learning about love in the back of a Dodge, which I suppose is close enough, considering the lesson hadn’t gone too far.

Still, they’ve shaken off stodginess before. Virgil Exner’s “Forward Look” Mopars, introduced for ’57, had the audacity to boast “Suddenly it’s 1960!”

And there’s, well, this:

If that doesn’t work, there’s always the centerfold.

“How much do you want for the puppy?”

The child thought for a moment, then briefly channeled Dr. Evil. “One million dollars.”

A frown, and then: “How about two kittens at $500,000 each?”

And so a deal was made in the neighborhood, and everyone was happy.

It’s going to take something like that for the taxpayers to recoup their quite-involuntary investment in the American auto industry. From a new GAO report [pdf], we find this little jewel:

Equity value of company necessary to recoup investment:
Chrysler: $54.8 [billion]
GM: $66.9 [billion]

By comparison, Ford, an automaker not owned by the government, which is for the moment marginally profitable, has a market capitalization around $24 billion. How in the world is Chrysler, maybe half the size of Ford in a good year, ever going to be worth $55 billion? Somebody’s going to need an awful lot of high-priced cats.

Starting in 2010, Chrysler will ditch the traditional owner’s manual in favor of an abridged Quick Service (or something) Guide and a DVD.

I’m not quite sure how to take this. I am a vocal, unapologetic advocate of RTFM, but if people read the effing thing in the first place, which generally they don’t, I wouldn’t have to be nagging them about it. At least there’s a small chance they might actually watch the disc.

Then again, if you’re stranded in Permafrost, New Hampshire and the entire electrical system is hors de combat — well, they better have all the fuse locations printed somewhere.

As of the end of the 2009 model year, Chrysler’s lifetime-warranty program is dead. In its place: the usual 3/36, 5/100 corrosion, whatever is required by emissions regulations, and a 5-year, 100,000-mile powertrain warranty that is assigned, not to the owner, but to the vehicle itself, which if nothing else will cut down on warranty-transfer hassles.

This is probably not the most intuitive move for an automaker whose cars are not known for incredible reliability, but the old “lifetime” warranty didn’t extend to a second owner at all, so this might theoretically be good for resale value on gently-used Mopars.

(Via The Truth About Cars.)

Second Deputy Under-Assistant Car Czar Ron Bloom let it be known yesterday that the car companies the government controls are once again responsible for their own warranty coverage:

Toward the beginning of the restructuring process, the Auto Task Force implemented a Warranty Program to give confidence to GM’s and Chrysler’s customers during a period of substantial uncertainty regarding the outlook for the companies. With the successful emergence of the new companies, consumers can now feel assured that the companies have the financial wherewithal to meet their warranty commitments on a continuing basis. As such, the Auto Task Force determined that it was appropriate to end the Warranty Program. I am happy to report that $641 million invested in the program has been returned to United States Government along with interest payments on the program. This achievement represented a prudent short-term use of taxpayer funds.

Of course, $641 million compared with the untold billions poured into these particular ratholes corporations — well, let’s see if the bank will take $2.69 toward my mortgage payment next month.

Still, we should hope Mr Bloom’s confidence is not misplaced, if only because it would be nice to get some sort of return on, um, investment.

(Via The Truth About Cars.)

In semi-socialist America, Dodge gets the hell out of you.

Chrysler is cutting loose 789 dealerships, including the following Oklahoma stores:

• Ballard’s of Clinton
• Eddie Cordes, Lawton
• Fenton Motors, Stillwater
• Janzen Jeep, Enid
• Jensen’s Inc., Fairview
• John Thomas, Cordell
• Crossroads Superstore, Atoka
• Milo Gordon Chrysler, Lawton
• Oakley Jeep, Bartlesville
• Reynolds Auto Group, Durant
• Williams Chrysler-Dodge-Jeep, Stigler
• Wilson Jeep, Stillwater

Here’s where it gets interesting:

Chrysler, because it is under Bankruptcy Court protection, will not be required to buy back vehicles, tools or parts from rejected dealers.

However:

Chrysler will match rejected dealers with accepted dealers, who will buy back parts, tools and vehicles.

Assuming, of course, the surviving dealers actually want all that stuff.

This does not reassure me about the stability of the New Government-Approved Chrysler:

When I purchased my ’09 300C I traded in an ’05 that had a Chrysler extended service contract with time and mileage remaining. I called Chrysler and they gave me all of the information for obtaining a pro-rata refund as per the contract. I faxed it over and got very quick service. I had a check from Chrysler in the amount of $363.62 in under two weeks. I cashed it at my bank and today my bank mailed it back to me: Insufficient Funds! The check was drawn on a JP Morgan Chase account. I guess the bankruptcy is going to strike close to home.

The next step, of course, is to send the bill to Barack Obama.

There’s apparently less than meets the eye in the revised Chrysler restructuring plan [link goes to PDF file]:

What they are really saying here, but they are smart enough not to utter the actual words, is that their sales depended on a finance arm that was willing to lend at below-market rates to people with bad credit scores, and the lack of this hidden subsidy is what is making it hard to sell their cars. Credit exists — what no longer exists is zero-percent-interest-to-anyone-who-walks-in-the-door-no-questions-asked financing. Instead of figuring out how to make cars that don’t require hidden subsidies to get off the lot, they are trying to get the government to fund their hidden subsidies.

To sell that premise, they’re waving the “electric car” flag:

[A]ny intelligent restructuring plan would recognize that electric cars, even if they are successful in the marketplace, are not going to be anything but a cash drain for years. This kind of thing has to be put on hold while the company gets back on its feet. But instead, since this is a political and not a business document, Chrysler is practically leading with it.

And this line from the actual plan bothers me greatly:

A two-mode hybrid version of the Company’s best-selling vehicle, the Dodge Ram is scheduled for 2010.

The last time they had two-mode hybrids to sell — the Chrysler Aspen/Dodge Durango twins — production was halted after a mere two months. (This is the same system you’ll see in some GM vehicles.) Hardly speaks well of their confidence in the system, I’d say.

A couple of months ago, Rich Truesdell of Automotive Traveler came up with what seemed like a crazy idea:

Fiat has been on a roll with a succession of successful models that has stemmed the losses and put Fiat on a sound competitive footing in Italy as well as many markets in Europe. While Fiat is not immune from the current industry malaise, it has strong mainstream products in the all-important B- (Ford Fiesta) and C-segments (Ford Focus) with the Grand Punto and Bravo, respectively, and with the soon-to-be-replaced Alfa Romeo 159 in the D-segment. Chrysler, which has no B-segment subcompact and whose Sebring (and companion Dodge Avenger) have been a huge disappointment in the midsize D-segment, is weak in all three categories.

Looking at the situation objectively, Chrysler has immediate needs in the B- and D-segments, and the Dodge Caliber certainly could be augmented by the stylish Fiat Bravo. Fiat-Alfa Romeo could fill these needs for Chrysler. Conversely, to be considered a global player, a manufacturer must have a US/North American footprint, which Fiat lacks.

Conversely, the under-utilized Chrysler dealer body could be used to sell selected Fiat and Alfa Romeo products. In addition to the previously mentioned Fiat Grand Punto and Bravo and the next version of the Alfa Romeo 159 (and possibly its companion sports models, the Brera and Spider), Chrysler’s dealers could also sell Fiat’s trendy, retro 500. Alfa Romeo, which has been threatening for years to reenter the US market, would have dealers ready, willing, and able to provide the needed support instead of dualing with Maserati dealers, which has been rumored.

Well, looky here:

Fiat SpA is in talks with Chrysler LLC over a possible stake in the struggling U.S. automaker, a source close to the Italian group said on Monday.

“Between the two groups, there is talk about Chrysler possibly using Fiat technology in exchange for a stake,” a source told Reuters, speaking on condition of anonymity.

How much of a stake are we talking here, anyway?

The talks between Fiat and Chrysler were reported by auto industry publication Automotive News Europe earlier in the day on its website.

The publication cited unnamed sources as saying Fiat could take a stake of up to 35 percent in Chrysler and give the U.S. automaker access to platforms, engines and transmissions.

Presumably this would have to be cleared with Daimler AG, which still owns 19.9 percent of Chrysler, but I suspect they won’t object to anything that might actually bring them some return on what’s left of their investment.

Chrysler president/vice-chairman Tom LaSorda says no, they’re not parting out the company, no matter what you heard:

“What was reported that we’re in discussions to sell the Jeep brand is absolutely false,” LaSorda told reporters on a conference call Wednesday morning. “We will not separate the brands from the company.”

He said that the company has said for more than a year that it will sell non-earning assets, or assets that “may be coming due.” Chrysler has had discussions about selling the tooling of previous generation vehicles, or vehicles that are discontinued. But reports that the company would sell one of its manufacturing plants are untrue, and don’t make any sense.

And even if they were wanting to, the government might not let them:

“If we were to sell any assets, and if you looked at the loan agreement, the loan agreement would not allow us to do that without going through the ‘car czar’,” [LaSorda] added.

Of course, if Chrysler is forced to liquidate, all bets are off.

D-E-A-L-I-N-G?

South Korea’s Hyundai Motor Co has had talks with Chrysler LLC owner Cerberus Capital Management about a potential acquisition of the struggling U.S. automaker’s Jeep brand and possibly other assets, people with knowledge of the talks said on Friday.

The emergence of South Korea’s largest automaker as a potential bidder for at least part of Chrysler comes on the same day General Motors Corp said it was abandoning its own pursuit of an acquisition of its cross-town rival.

Cerberus also plans to restart talks [with] other potential partners, including Renault-Nissan, the sources added.

First, the obvious point: people with no “knowledge of the talks” wouldn’t say things like that.

Actually, Hyundai and Jeep fit together fairly well. Jeep, unlike the other Mopar brands, has a fair amount of brand equity these days, and there’s very little overlap in the product lines: the nascent Kia Borrego is probably the only model that would be rendered superfluous. (Yeah, there’s the Jeep Compass/Patriot, but they were superfluous before there was any merger talk.)

Getting hold of Chrysler’s extensive dealer network might theoretically be useful to Hyundai, which still has a reputation for fast-talking guys in plaid jackets catering to subprime customers. But the advantage goes away if they have to sell actual Chryslers as part of the deal, so I suspect that if there’s any deal here, it will be just for Jeep.

How to dispose of the rest of the company? We know that Nissan is dumping its big Titan truck after 2010, replacing it with a version of the Dodge Ram, and that Nissan will be building two small cars for Chrysler, one a Versa variant for South America and another to be sold in Chrysler’s “global markets,” such as they are. And Carlos Ghosn has long made noises about adding a US-based affiliate to the existing Nissan/Renault partnership. Nissan doesn’t need Jeep, really, since they have enough SUVs for a dwindling market; assuming Jeep goes to Hyundai, Nissan could reposition Dodge as strictly a truck brand — the Viper will be spun off to a third party, the Challenger will run its course, the rest don’t matter — and use the Chrysler channel for minivans (wouldn’t you rather have a Town & Country than a Caravan, even a Grand one?), the aforementioned Nissan-built small car, the successor to the 300 (let us pray), and the occasional revamp of a Renault Euromobile, though this latter might be tricky, since the one Renault that might sell well here, the mid-sized Laguna, could steal sales from Nissan’s Altima, built on the same platform.

A third, dimmer prospect: Volkswagen, for whom Chrysler is already building a minivan. We know VW wants to increase its market share in the States — in fact, they’re building a plant in Chattanooga to take advantage of the relatively-weak dollar. But I suspect they want to do it under their own name, not somebody else’s.

Getting the country back on something resembling a “peacetime” economy after World War II proved to be tricky: the government had yet to back away from the controls put in place to support the war effort, and when it did — President Truman dropped both price and wage controls in 1946 — the immediate result was a spike in prices without a corresponding spike in wages, accompanied by occasional shortages of commodities.

Henry J. Kaiser was new to the car business, which was probably a Good Thing in the late 1940s: while the first new postwar models from most manufacturers were warmed-over ’42s, Kaiser and sister make Frazer started off with brand-new designs, which sold well. And Kaiser, who’d been a big-wheel industrialist but who had never built cars before, apparently figured that he could keep ratcheting up production indefinitely. Lileks’ Bleat yesterday morning had a scan of a 1948 Kaiser-Frazer ad that expresses this ebullience:

Kaiser-Frazer never has subscribed and never will subscribe to an economy of scarcity and indecision. We proved that it was possible to batter down all obstacles and produce 145,000 Kaiser and Frazer cars last year. Now, Kaiser-Frazer vows to more than double last year’s rate of production! Why are we so confident? Because our sales continue to increase with each passing month!

As it turned out, Joseph Frazer, the half of the Kaiser-Frazer combine with actual automotive experience, had warned Kaiser that eventually — ’48, ’49, ’50 — their larger competitors would have new cars that would put the K-F sedans behind the curve, and that they probably should back off until the next generation was ready. Henry J. was livid; shortly thereafter, Joe Frazer was looking for work. But Frazer was right: a lot of leftover ’49s were reserialed as 1950 models, and the new Kaiser (the Frazer name was dropped after 1951) wasn’t going to be ready until 1951 at the earliest.

Continuing in his sorta-populist mode, Kaiser complained that not everyone could afford one of his cars, and introduced a compact called, of all things, the Henry J. It was a success at first, though it wasn’t that inexpensive; Sears, Roebuck sold a version (branded “Allstate”) for a couple of years at some Sears stores and in the catalog. But the Henry J didn’t compete well with Nash’s Rambler, another low-end car that didn’t appear so obviously built down to a price, and it was dropped after three years. The big Kaiser, futuristic and beautiful in 1951, was old news in ’53 and ’54, at least partly because the rest of the industry was playing with modern V8s, while Kaiser stuck with its old sidevalve six.

The last Kaisers appeared for 1955. The company had merged with Willys Motors, and ultimately the only products to survive the merger would be Willys’ line of sport-utility vehicles sold under the name Jeep.

I mention all this because there continue to be rumors that General Motors and Chrysler will merge, as early as today, and I suspect that the only Chrysler products to survive the merger will be the line of sport-utility vehicles sold under the name Jeep.