Thursday, April 30, 2009

Federal Cars, Inc.

Remember how, a few posts back, I declared that adding zombies could improve almost anything? I should have added a rider to that statement: "except the car industry".

In a blindingly obvious sop to the car unions in particular, and unions in general, the Obama administration has decided to allow Chrysler to go into administrative protection now that it's agreed to join Fiat in unholy matrimony, with the promise of billions more in aid in order to emerge "leaner and fitter" from the process. Great logic, and exactly the sort of thinking that should propel my new book, "the Amoebic Dysentery Diet", straight to the top of the best seller list.

Here, then, is a precise and detailed recipe for how to create a mega-zombie. Take one entity that has already achieved walking dead status, Chrysler, and duct-tape it to another, Fiat, that's been on life support for a couple of decades and is still rife with all the nasty diseases that all Italian business is riddled with (sloth, corruption, sloppiness and arguing-the-toss). In the process, screw over all the associated parts suppliers, dealers and, most likely, current owners, and embark on a death march that will take at least six months to complete, despite the ludicrous claims that things will be "back to normal" within 30 days, or "maybe 60 tops". Oh, and along the way said megazombie's sales will drop off a cliff as they are forced to slash prices even further in order to get anyone to buy their now worthless sheet metal.

There is absolutely no logic whatsoever to this deal, and here's why.

1. Chrysler will never have the money to bring new models to market at anything like the rate Ford or even GM - if they survive - will be able to muster, so there no greener lands of milk and honey anywhere within reach even if they do survive the operation.

2. But that's OK, because we can fill the gaps by selling re-badged Fiats, no? Well, actually, no. Today, zero Fiats (excepting Ferraris!) are sold here which of course means they've never been federalised. What do you reckon, 18 months minimum to get that process done? Hmm, isn't that a bit of a problem that no one is mentioning?

3. Does anyone in the US anyway even care about Fiat's mass-market cars? Probably not. After all, no other bog-standard Euro models have ever done much of anything in the way of sales here. Ford has never managed to get the hang of a world car despite throwing billions at the problem, and small hatchbacks of whatever brand are generally loathed here, regardless of the badge they bear.

4. And how exactly does this ridiculous partnership fix the problems Fiat has? While it was still just a no-risk way for them to get access to a broad-based US dealer network then perhaps it was an experiment worth running. Alas, they too are now going to be infected by the Chrysler virus, much as Daimler was before them until the Germans had the good sense to perform a serious amputation in order to halt their slide into oblivion.

There is no way forwards here that makes even the remotest sense. Cerberus, and their puppet master Nardelli, have systematically bled Chrysler dry to the point where federal zombification is the only way to keep this particular corpse animated and moving. Alas, by making this thing bigger instead of shooting it in the head, all the feds have done here is to increase its appetite for the "B" word, but in this case it's Billions, as in dollars, rather than "B" as in brains. Indeed, brains appear to be in very short supply in car-co land just now....

(Thanks to TTAC for the basics here - they are spot on, as always. Cool image at the top from here.)

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