Redstate

Jurgen Schrempp, who engineered the acquisition, is history. But as far as management bloodbaths, that's not really Germany's style. (With a few fascinating exceptions like Porsche a few years back.)

America is the only place in the world where shareholders have that kind of power. Everywhere else, business management is part of the aristocratic class. (Keep that in mind next time someone tries to tell you that Japan is better because their ratio of CEO pay to shop-foreman pay is so much lower than ours.)

Can you fix? It's true that Daimler breaks top lines out for Chrysler (they had a very impressive 2005 and an impressively bad 2006). But were you able to turn up balance sheet data?

I'm wanting to know how much long-term debt Daimler wants to shed along with Chrysler. (The "enterprise value," if you will.) If it's a big number, that's going to advantage the private equity guys, who can syndicate it easily enough, and disadvantage that Canadian company.

Here

"Dulce et decorum est pro patria mori"
Contributor to The Minority Report

Overall, keep in mind this is also Euro's. There is some top level data that contains debt information, but that is not broken out by division (and not enough for "enterprise").

If the balance sheet breakdown is available, I will post the link.

"Dulce et decorum est pro patria mori"
Contributor to The Minority Report

Okay, so perhaps this works here.

"Dulce et decorum est pro patria mori"
Contributor to The Minority Report

I have been concerned that auto sector issues will be the straw that breaks the camels back on nationalized health care.

I was much younger when HRC took made her ham-fisted initial attempt, but my recollection was that the business lobby was not supportive of it at the time, obviously the insurance companies were strongly opposed, but I don't recall other business sectors really coming out in favor of it.

But lately Hillary has been playing footsie lately with the auto industry with the subtext of how to save them by freeing them from anti-competitive healthcare costs.

http://www.laborradio.org/node/1743

If the business lobby becomes splintered on nationalizing health care because heavy industry manufacturers want to save their hides and wall street money shops want to reap bailout profits, then a big piece of the usual conservative coalition falls off on this issue.

If that happens, and there is a Dem president and Dem Congress in 2008, and any of them paid attention to what Hillary did wrong in the first go around, they could be well positioned to pass some sort of nationalized health care legislation.

From a trade pub I get at work, there's this:

The 2006 Harbour Report showed Honda's average profit per North American-made vehicle was $1,215. That figure was nearly five and a half times that of DaimlerChrysler ($223) and a world ahead of Ford ($590 loss per vehicle) and General Motors (minus-$2,496)... Toyota ... profit per vehicle, according to the Harbour Report, was $1,587.

I was shocked to read these numbers. GM loses ~$2500 every time it sells a vehicle? How are they going to survive that?

Retire Lindsey Graham. Support Thomas Ravenel for Senate 2008

Marketing is also first rate. Design is part of marketing, the way I look at it, but you may disagree with that.

I'm not old enough to remember the fights over airbags, seatbelts and other safety features that the erstwhile Big Three fought on cost grounds, so I can't answer your point that these were marketing failures. But Detroit's marketing these days is in very good shape.

My point as always is that the Big Two-and-a-Half just don't have access to enough reasonably-priced capital to really execute any kind of plan. So they have to take really big swings like SUVs. These were unquestionably the right move at the time and still are in retrospect, but they're over now.

F and GM will have some successes going forward, but of course these will be obscured by all the well-deserved doom and gloom. And the general trend is in the wrong direction.

Autos are not a nimble industry. Japan has an unbeatable edge now.

I drive a Chrysler 300M, the last "old" Chrysler product. It is a magnificent car, one of Car and Drivers' "10 Best" for several years. In the seven years I've owned it, it has required only one repair: the driver's side power window mechanism failed at 60K miles, a common occurence without regard to brand in a climate where the windows are frequently frozen shut. Other than oil, filter, and fluid changes, it has required NO service beyond wear parts such as brake pads and new shocks at 50K; they weren't worn out, but were getting too soft. Even the OEM Goodyear tires are still servicable though I only use them half the year, changing to snows from Oct thru April.

I just spent three weeks with a Chrysler 300C, the flagship of the new DC, while travelling down South. It is a VERY German car, the most graphic evidence being the rock-hard seats. Despite the German reputation for good ergonomics, the controls do not come to hand nearly as well as the predecessor's; the stylishly gated shifter, something totally unnecessary on an automatic, even a shiftable one as the 300 has, is simply a PITA. The criuse control was nothing short of abysmal; even after three weeks, I was as likely to flash the brights or hit the turn signal or wipers as to set the cruise control. The stylishly, some might say gangsterishly, low roof line severely restriced visibility in all directions, but most noticeably forward and rear quarter vision, though admittedly rear quarter vision in the M is nothing to write home about. The M has a cavernous trunk and I'll admit to using mine like a truck at times; just fold down the rear seat and you can haul most anything - and I've hauled my dingy, outboard, crab pots, fertilizer, building materials, you name it. The new C has a much smaller trunk, we had luggage in the back seat the whole trip, and the latch failed a couple of days into the trip requiring some decidedly "agricultural" repair with a hammer. The engine was the higher powered 3.5L V-6 carried over from the M and it remains a lovely engine; powerful and responsive, if a bit noisy at full throttle, yet capable of cruising a large, heavy car at freeway speeds and then some while getting gas milage in the high twenties, low thirties and averaging in the mid-twenties for all sorts of driving.

It is getting some age on it now, so I've thought of replacing it, but don't see anything, domestic or imported, within $15K of the price of a 300 that I like at all, and I don't much like the new 300C, though were I willing to spend the money the 425 hp RT-8 version would be a kick - if a bit of overkill in a town with 38 miles of "open" road.

In sum, it isn't the cars, though I don't think the Germans improved the car, it is the fundamental economics of the American auto industry, for which I don't see a ready solution short of bankruptcy and reorganization.

In Vino Veritas

Such incredible passion for the products. Reminds me of what Apple does with consumer electronics. To your point about quality, Mercedes is well-known for having the worst in the world, and has for many years, despite their high-end reputation. But I have no hard information to suggest that their perennial problems have infected Chrysler.

Beyond that, I can't answer you, since I don't have a driver's license. (I own cars, to be sure, but I don't drive them myself!)

If you want me to really wax prolix, I can get started on those two GM V-8s in the back of my boat! The only thing better than the gutteral howl of a GM small-block at full throttle is the sound of two of them - so long as you don't count the cost. On a good day, I can trim it out so I can get 1.3 - 1.5 miles per gallon, but somebody has to support the economy.

In Vino Veritas

...suggest that it's precisely the opposite: The Mopar guys got the better end of the deal -- their quality went up -- and Mercedes caught Moparitis, and its stuff went down.

I'm a Chevy guy, but I'm not into cars enough to know more than that Chrysler used to be known as crap for a reason.

-----------
We are all heroes, you and Boo and I. Hamsters and rangers everywhere, rejoice!

to the recent models I've had, an '88 LeBaron Turbo Coupe and a '99 300M. The LeBaron took the K-car further than it should have; too much weight and power on a drive train, and especially suspension and brakes that were meant for a lightweight economy car. Nevertheless, it went over 120K relatively uneventful miles until my daughter blew the engine in a scene right out of a NASCAR race - old cars shouldn't be driven over 120 mph! Blew the oil line to the turbo and there was one Helluva bunch of smoke and noise. It went through a lot of brake discs since they really weren't up to the added weight and power. I've already described the 300M - simply a great car. My wife has an '01 Sebring Coupe that is a Mitsubishi product and not nearly as much car, but it has been reliable - and frightenly fast in the hands of a woman who views an accelerator pedal as an on-off switch.

To your main point, my general sense of the older ones is that the engines and drive trains were bullet proof, but the small parts and fit and finish left a lot to be desired.
In Vino Veritas

I read your post with great chagrin and worry. Since the redesign of the Dodge trucks in the early 90s, my husband and I have owned 6 of their trucks, all dually diesels. We currently drive two 1-ton, 4wd, 4door trucks. We enjoy driving them, they will do anything we need to do and we've never had any trouble with any of them. And they are a thing of beauty as well.

If we lose them and are forced into Fords or Chevys (of which we owned at least a dozen before the redesign), there will be much wailing and gnashing of teeth in this household. If they didn't cost about $40K apiece, I would stock up for the hard times ahead.

I meant what I said and I said what I meant. An elephant's faithful 100 percent.

I bet your neighbors wish you would get them off the blocks and out of your front yard. :-)

Envisioning when all that is Left is the Right.

But I'm usually sitting in the back, not the front.

;-)

Envisioning when all that is Left is the Right.

can't be swayed, no matter how much time or money one invests in new products and brand stewardship? Hmm, I know plenty of people in media/branding/strategy that would strongly disagree.

Seems to me that once you're behind the eight-ball in a large, slow-moving industry, there just isn't enough time left to make a meaningful recovery. And all the trends continue in the same direction. Detroit continues to lose money, while the Japanese think they're having a bad year if their net margins drop below 10%.

Perceived value can definitely change. And again, it can change based on fact, or based on imagination. I would argue that when Japanese automobiles first became available to American consumers, perceived value greatly favored the big-3 - or at least the known track record of big-3 automobiles contributed more to the value equation when compared against new product with an unknown track record. The Japanese started out behind the eight-ball as it were, but they competed and slowly the relative value perceptions between their product and the big-3 product changed, didn't they?

I would argue that much of that change was based on fact - Japanese automobiles (at some point) had an objectively higher value where motivations like longevity, quality, and cost are concerned. In other words, the consumer-to-consumer transmission of perception didn't occur simply because the Japanese marketed better or the Americans marketed poorly; those consumers altered their perception slowly based on experience accumulated over several years, maybe a couple of decades, of owning and using the products.

Now you seem to argue, and I'm happy to take your word for it, that today there is either no objective value advantage for Japanese automobiles over the big-3, or that the big-3 have in fact regained an advantage. But the point we both seem to agree with is that it takes some time for perceived value to change in the marketplace for automobiles. It looks to me that a majority of American consumers still perceive a higher value from Japanese automobiles. How many years until that changes? And what impact can marketing and branding have on accelerating the change, when consumers purchase so few of the product over time? Some impact, yes, but aren't consumers basing their decision much more on the perceptions that they and other consumers in their network hold, which are built up from experience gained over years of product ownership, and less on the last few Ford television commercials they vaguely remember?

By the time perception shifts back to favor the big-3, it may be too late, and the "death blow" may come from other factors like an inability to restructure and survive with fewer sales and higher operating costs, or lack of capital, etc. But IMO the marketplace disadvantage that accumulated over time and allowed the Japanese to take a commanding lead (and put the big-3 behind the eight-ball) was a direct result of losing the perceived value battle.

As I recall from reading history, Detroit first felt the competitive pressure from imports in the late Fifties. At that point, their perception was that cars from Europe and Japan (which had abysmal quality at the time) had two related advantages: cost and small size. So Detroit spent the better part of two decades trying to build smaller cars that weren't just shrunken versions of big cars. It wasn't until Chrysler invented the minivan in the early Eighties (correct?) that anything fundamentally changed in this dynamic.

And I still remember how surprised I was to hear a guy I considered an authority figure about twenty years ago tell me that the Honda Accord was the best car in the world. I was just a kid but I had never heard anyone mention "Japan" and "quality" in the same sentence until then. That may have been part of the turn in perception that you're describing.

But I care greatly about the future, especially for jobs and productivity for Americans. Marketing, engineering and quality are non-issues. I don't believe there's anything wrong with the American auto industry that can't be fixed by 1) eliminating the UAW; and then by patiently investing 2) time; and 3) money on new products.

Unfortunately, Detroit will get not even one of those required elements.