Automotive News - December 8, 2008 - (Page 8) TIMES ARE TOUGH. RELYING ON YOUR AD AGENCY SHOULDN’T BE. In a time when the auto industry is in crisis, you need an advertising agency that understands and has real experience in driving next day sales, even when your ad budgets are at their lowest point ever. That’s what Zimmerman is all about. We have over 25 years of skill, knowledge and experience when you need it most. We measure our success by the numbers on your balance sheet, not ours. This guiding principal of true partnership is what motivates us to bring you the best advertising and marketing strategy. It really is about being there for you 24/7, seriously. 8 • DECEMBER 8, 2008 SHOWDOWN IN CONGRESS Capitol quandary: Can Chrysler survive? Bradford Wernle bwernle@crain.com Sen. Bob Corker, R.-Tenn., drove right to the heart of what makes Chrysler LLC’s predicament different from those of General Motors and Ford Motor Co. as it pleads for a $7 billion federal loan to survive the first quarter of 2009. “There’s no future for the company as a stand-alone,” said Corker, addressing Chrysler CEO Bob Nardelli last week during a Senate Banking Committee hearing on a bailout for Detroit’s carmakers. Nardelli vehemently disagreed. But the senator’s point distilled Congress’s dilemma regarding Chrysler: Why should taxpayers bail out Detroit’s smallest automaker if its ability to survive is doubtful and its deeppockets majority owner, Cerberus Capital Management LP, won’t put money into it? Hollowed out Nardelli admitted Chrysler had been “hollowed out” during its decade as a division of DaimlerChrysler when essential engineering and design functions were centralized in Stuttgart. But during the hearings, Nardelli vigorously defended Chrysler’s efforts to restructure itself as an independent company. He said Chrysler had improved existing vehicles quickly and is developing future ones by forming alliances with suppliers and other automakers. He said Chrysler will bring out 24 new products by 2012 and pointed to Chrysler’s budding electric vehicle program. Chrysler has identified $4 billion in cost savings, he said. Chrysler’s attempts to rebuild its engineering capacity in the wake of the 2007 divorce from Daimler have stalled because of the current cash crunch. At the end of November, about 5,000 white-collar employees took buyouts and early retirements from Chrysler, many of them engineers. Last week Chrysler told em- LARRY DOWNING/REUTERS Chrysler CEO Bob Nardelli disputed the assertion of Sen. Bob Corker, R-Tenn., that Chrysler had “no future” and defended efforts to rebuild the company. ployees it was consolidating its platform teams from five to three after the buyouts. Lacking the resources to develop its own small car, Chrysler sought help from Nissan and Chery Automobile Co. in China. So far, only the Nissan small car project has borne fruit; a Japanese-built small car is scheduled to appear in Chrysler’s U.S. lineup in 2010. Chrysler’s case Chrysler’s unique problems may discourage Congress and potential partners. $7 billion may not save the company if Chrysler Financial doesn’t get help, too Simmering dispute with Daimler clouds ownership Cerberus’ unwillingness to invest makes Congress wary Even if Congress saves Chrysler, the company may end up in the hands of a foreign automaker Last week Mark Chernoby, leader of the Project D team, was named vice president of alliances and partner- Mid-sized question Chrysler has not decided whether to develop its next generation global mid-sized car with a partner or to go it alone. The mid-sized program, called Project D, was conceived in late 2006 to replace the disastrous Chrysler Sebring and Dodge Avenger mid-sized cars. These are some of the marketing solutions we offer to our partners: Advertising ships. Chrysler did not name a successor or say what the fate of the project would be. Likewise, Chrysler’s ability to develop new technologies is uncertain. Through its ENVI electric car division, Chrysler unveiled three electricdrive concept vehicles and has promised to introduce one of them in 2010. But Chrysler needs to integrate the hybrid powertrain into one of its existing vehicles and develop the software to manage the complex system. In the recovery plan it submitted to Congress, Chrysler estimated it could achieve synergies of $3.5 billion to $9 billion annually through an “alliance or consolidation.” But those numbers are pie in the sky until Chrysler’s survival is resolved and a white knight partner is found. Chrysler’s effort to find partners has been sidetracked by the hearings — and the company’s other daunting problems. Last week Nardelli admitted that Chrysler might not survive even with the $7 billion it seeks if its captive lender, Chrysler Financial, doesn’t get a piece of the $700 billion Troubled Asset Relief Program. Then there’s the Cerberus dispute with Daimler AG over Daimler’s remaining 19.9 percent stake in Chrysler. The two entered talks aimed at a Cerberus buyout of Daimler. But the companies launched a war of press releases in late November that sounded like the prelude to lawsuits. While these problems fester, Chrysler is burning through cash at $1 billion per month. Corker said he had spoken to an unidentified Cerberus board member the night before the Senate hearings, and the board member told him there is no way Cerberus will invest more in Chrysler. Yet, Corker said, “We are being asked to do that.” Cerberus and Chrysler will have to come up with good reasons why Congress’s answer should be yes. c Steve Miller: Detroit 3 need ‘pseudo-bankruptcy’ Edward Lapham Steve Miller was one of the heroes of the 1979 campaign that secured federal loan guarantees to rescue Chrysler Corp. Since then he has rehabilitated several troubled companies. So I asked him how the current Detroit 3 request for financial aid stacks up — and what the U.S. automakers need to build sustainable business models. “They need an out-of-court pseudo-bankruptcy that mimics the things that might happen in a bankruptcy,’’ Miller told me Friday, Dec. 5. That’s what Chrysler did. Miller is chairman of Delphi Corp., which has been in Chapter 11 reorganization since October 2005. He has used bankruptcy and prepackaged bankruptcy as turnaround tools for Delphi and other companies. But neither is a plausible option for the Detroit 3, he said. Why not? The U.S. bankruptcy system isn’t built to handle anything as comment Edward Lapham is executive editor of Automotive News “big, complex and politically sensitive’’ as a GM bankruptcy, he said. Prepackaged bankruptcies are interesting, Miller said, but he insisted they don’t save any time because all of the concessions need to be made before going to court. And time is a crucial element. Chrysler’s situation in 1979 was urgent, Miller said, but nowhere near as urgent as the situation facing GM and Chrysler LLC. Miller reminded me that Congress debated the loan guarantees for three months. And after the bill was signed into law on Dec. 21, 1979, it took six call tracking system advertising 1-888-878-ZADV email us: or visit: zauto@zadv.com www.zadv.com more months of head-banging for Chrysler to get all the stakeholder concessions required by the law before the automaker could draw its first guaranteed loan. That’s why March 31 could be an overly optimistic deadline for the Detroit 3 to line up concessions from stakeholders. In 1979, Chrysler was one company with one main problem: It needed cash. This time there are three companies with different needs. A onesize-fits-all solution would be difficult, Miller said. What could cause problems? An auto czar who micromanages the companies would be a mistake, Miller said. Likewise, it would be destructive to restrict investment overseas. Instead, an oversight board or auto czar should establish some guiding principles, stand back and let management manage. This bailout is about saving jobs, but an excessive focus on creating jobs would be bad, Miller said. “You don’t want to mandate jobs that aren’t needed,’’ he said. “In effect, Delphi’s Steve Miller: “They should just make the companies healthy.” that would be creating a Jobs Bank again.’’ Said Miller: “They should just make the companies healthy and let the market do the rest.’’ You may e-mail Edward Lapham at elapham@crain.com http://www.zadv.com http://www.zadv.com
Table of Contents Feed for the Digital Edition of Automotive News - December 8, 2008 Saturn: What's next? Feds tighten strings on Detroit 3 Ford stance: A cut above ailing rivals Summer sizzlers fizzle in fall Dealers back Detroit 3 aid, want spiffs Ford modifies pricing promo to equalize rebates High-fliers Toyota, Honda are struggling, too Chrysler: Bankruptcy counsel supports its stance Dealer Hecker hospitalized Ford to add a shift, OT for F-150 Koreatown dealer scrambles to hang on in L.A. Nissan bucks trend, will move to bigger trucks Why GM must stay with Buick Mercedes prices new GLK below $35,000 Diana T. Kurylko Pride of Sweden set to be Detroit castoffs Toyota pushes breakup of seat suppliers to boost competition Panel to discuss innovation, sustainability Capitol quandary: Can Chrysler survive? Steve Miller: Detroit 3 need 'pseudo-bankruptcy' Acura aims to deliver big-league luxury TL campaign is important for Acura's ad shop, too Appeals court upholds franchise termination GM loses bid to relocate Chevy store This is a very big week for America Obama must steer clear of state fuel standards Higher fuel taxes are not the answer A $15,000 rebate, not a blank check Chrysler retirees look for equality Isn't an auto show a place to sell? Are we turning our back on diversity? If only we'd had an energy policy Personnel GM sets Jan. 1 deadline for dealers to adopt Windows-based parts system Ford picks TRW steering system Ford cuts noise with windshields Dealers, factories battle over Fla. warranty law Online systems boost accessories sales Mercedes cuts output in Ala. Ford will kill Sable, Taurus X November sales suffer car wreck Honda, Audi pull out of racing series Saturn: A different kind of franchise agreement Fewer days sink Nov. output Detroit 3 road trip: Quiznos and humble pie LaNeve: Death talk keeps the showrooms empty Toyota cuts bonuses in bid to stay in the black Auto blowout sends Andrettis to the pits Saturn founder Neil DeKoker still believes And then there were . . . 6? Dealers Automotive News - December 8, 2008 Automotive News - December 8, 2008 - (Page Intro) Automotive News - December 8, 2008 - Ford stance: A cut above ailing rivals (Page 1) Automotive News - December 8, 2008 - Ford stance: A cut above ailing rivals (Page 2) Automotive News - December 8, 2008 - Chrysler: Bankruptcy counsel supports its stance Dealer Hecker hospitalized (Page 3) Automotive News - December 8, 2008 - Nissan bucks trend, will move to bigger trucks (Page 4) Automotive News - December 8, 2008 - Nissan bucks trend, will move to bigger trucks (Page 5) Automotive News - December 8, 2008 - Panel to discuss innovation, sustainability (Page 6) Automotive News - December 8, 2008 - Panel to discuss innovation, sustainability (Page 7) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8a) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8b) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8c) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8d) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8e) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8f) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8g) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8h) Automotive News - December 8, 2008 - TL campaign is important for Acura's ad shop, too (Page 9) Automotive News - December 8, 2008 - GM loses bid to relocate Chevy store (Page 10) Automotive News - December 8, 2008 - GM loses bid to relocate Chevy store (Page 11) Automotive News - December 8, 2008 - Chrysler retirees look for equality (Page 12) Automotive News - December 8, 2008 - Chrysler retirees look for equality (Page 13) Automotive News - December 8, 2008 - If only we'd had an energy policy (Page 14) Automotive News - December 8, 2008 - If only we'd had an energy policy (Page 15) Automotive News - December 8, 2008 - Ford cuts noise with windshields (Page 16) Automotive News - December 8, 2008 - Online systems boost accessories sales (Page 17) Automotive News - December 8, 2008 - Online systems boost accessories sales (Page 18) Automotive News - December 8, 2008 - Online systems boost accessories sales (Page 19) Automotive News - December 8, 2008 - Online systems boost accessories sales (Page 20) Automotive News - December 8, 2008 - Ford will kill Sable, Taurus X (Page 21) Automotive News - December 8, 2008 - Ford will kill Sable, Taurus X (Page 22) Automotive News - December 8, 2008 - November sales suffer car wreck (Page 23) Automotive News - December 8, 2008 - Saturn: A different kind of franchise agreement (Page 24) Automotive News - December 8, 2008 - Fewer days sink Nov. output (Page 25) Automotive News - December 8, 2008 - And then there were . . . 6? (Page 26) Automotive News - December 8, 2008 - And then there were . . . 6? (Page 27) Automotive News - December 8, 2008 - And then there were . . . 6? (Page 28)
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.