September 12th, 2009 • by David Zatz
Congratulations, Bob Lutz. You had the right idea on GM.
Most Americans think GM and Chrysler are still bankrupt. General Motors is running a series of ads to show that it isn’t, and that it still has a future.
A huge number of Americans still seem to think that Chrysler is owned by the government or Fiat, or both (that is, depending on their mood, they say Chrysler is owned by the government, or they say it’s owned by Fiat.) Most of the rest think it’s directly owned by the UAW.
We’re not going to get into the problems with our news media and educational institutions, or the merits of teaching calculus instead of research methods, or of teaching about dates, names, and empty events, some of which were made up (which is sometimes referred to as “high school history”), instead of logic and reason. The problem here is mainly Chrysler’s fault — because they never managed the public and pundit reactions to their actions.
Many still believe Obama ordered Chrysler to close dealers due to their political leanings. Many still believe Chrysler had no justification for closing dealers. The company did release their rationale shortly after the firestorm began, but there would not have been one had they done what GM did — immediately released their rationale, and provided an appeals process in case the dealer relations people were not, shall we say, perfectly unbiased. Or in case they made a mistake. Daimler culture will take a long time to erase (especially since the arrogance of Daimler seems to be matched by the arrogance of Sergio — though at least the latter has something to be arrogant about. Something he didn’t make up.)
General Motors is not just getting its message out, it’s doing it across a variety of media. You will find lots of GM ads on Allpar, because they’re targeting all car buyers. You won’t find ANY Chrysler ads on Allpar. That’s their choice, not ours.
Ford has made an amazing number of sales based on their whisper campaign that GM and Chrysler are going away. GM is fighting that, and I think they’ll be very effective in fighting it.
Unfortunately, due to the weakness of Chrysler’s own leaders, the average American will still think that Chrysler is owned by Fiat, not honoring warranties, and is still bankrupt. That’s pretty sad, especially since there’s no reason for it.
May 11th, 2009 • by David Zatz
Before I can be accused of pulling a Leinert, the answer is “probably not.”
Jeep would be hard to pull away from Chrysler without one or the other being seriously wounded, but it’s not impossible. The Nitro would be dropped, the next-generation Durango either dropped or licensed or somehow dealt with, the engines licensed until Jeep could buy something new. Engineers could be reassigned or computer files sent over to other engineers who could spend some time trying to figure everything out. It wouldn’t be ideal, it wouldn’t necessarily make sense, but it could happen.
On the other hand, does Navistar actually have the money to make it happen? And is Jeep worth that much in its current state?
Plenty of other companies have 4×4 cred now. Toyota, Ford, and Mahindra have all made names for themselves, Toyota and Mahindra through actual street machines, and Ford through marketing and sponsorships. Just having off-road cred isn’t enough anyway; Hummer is being sold off and presumably could out-Jeep Jeep.
Based on the numbers, any buyer for Jeep would have to put a few hundred million into the acquisition itself, a few hundred million into bringing products to market, and then provide something to the creditors. Does Navistar even have the money?
Navistar had a gross profit for 2007, 2008 ($2.8 billion), and Q1 2009 ($647 million). Their net loss in 2007 was $120 million; in 2008 they made $134 million; in Q1 2009 they made $234 million. Still, their total liabilities were, in January, $11 billion, with $9.6 billion in assets. They are losing cash, and I don’t figure this will be a good year for them. (Q1 2009 for them ended January 2009 so it doesn’t fully reflect current events, but net change in cash was -$364 million.) This year has been bad for the commercial-truck market; Sterling was shut down and the company formerly known as Freightliner has experienced the revenge of Daimler.
I don’t see Navistar as being able to keep Jeep going as a mass market company anyway. Perhaps they could keep it running like Kaiser or even AMC did, but the cost of playing the game has shot up dramatically and they have real competitors now. They just aren’t big enough and they don’t really have the kind of assets needed for the typical Jeeps: gas-powered Wranglers, Libertys, and Grand Cherokees. The enthusiasts would buy diesel Wranglers, but how many are there? Really? Compared with the hordes who used to buy Libertys, Cherokees, and Grand Cherokees?
As for other Jeep buyers, I don’t see any. Mahindra isn’t sized to buy Jeep, and has already turned it down; Toyota is but has no need for it, and doesn’t usually buy other companies (especially non-Japanese companies). Ford could use it but has no cash; ditto GM which can’t even keep its Pontiac brand alive, or hold onto Opel. Honda and BMW both have leaders who are smart enough to know what they do well, and stick to it. Who is left that has money? Only the Chinese brands, and apparently they’ve already turned down Jeep (though, apparently, not Hummer.)
Time will tell; strange things have indeed happened, and the public statements from some of the parties have been shown to be unreliable. But Navistar… I would not bet on it.
