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Analyst: “Chrysler will go away.”

by Bill Cawthon on

Sean McAlinden, chief economist for the Ann Arbor-based Center for Automotive Research says both Chrysler and General Motors are technically bankrupt and that Chrysler is unlikely to survive.

McAlinden was speaking today at a conference at the offices of the Detroit News and the Detroit Free Press (the two publications have joint offices).

According to McAlinden, the automakers won’t even make it with the federal funds each recently received. However, GM will likely be able to get improved loan conditions that will allow it to hang on. Both GM and Chrysler are hoping to negotiate more favorable loan conditions with the incoming Obama Administration and the new, Democratic-controlled Congress.

On the other hand, McAlinden said Chrysler is in hibernation with its factories idled and its purchasing department dismantled. He forecasts that Chrysler’s workforce will be reduced to about 17,000 by 2012; the number he sees GM being willing to absorb in an acquisition. McAlinden did not say why GM would remain interested in purchasing Chrysler when the larger company is already looking to pare brands and reduce its head count and product line, but analysts seem to have a fixation on this scenario.

“Chrysler will go away,” McAlinden told the audience. He added, “Most cats don’t have that many lives.”

McAlinden’s comments were disputed by Chrysler spokeswoman Shawn Morgan. Morgan said Chrysler is consolidating its staff at its Auburn Hills campus and continues to work toward returning the company to profitability.

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for just-auto.com, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.


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