"Tom Byrne" <kerib@ptd.net> wrote:
: Chrysler was not on a major rebound.
I could be mistaken, but I would call going from the verge of
bankrupcy, where they needed to borrow money from the US Gov't just
to stay alive, then using the K car and minivan to build themselves
back up to the point where they actually had $20 billion in liquid
reserves one *heck* of a rebound. They came out with the Dak (first
mid-size truck, then had the guts to put a V8 in it), the new Rams
(very controversial, cutting edge design at the time), the Viper,
the new Dak, the whole cab-forward thing, all the while with the
quality getting better, the vehicles were getting better, IMHO, the
sky was the limit.
: They had run out of R&D money and the
: didn't even have the money to bring the PT to market.
I guess $20 billion doesn't go nearly as far as it used to. With
those kinds of cash reserves, I have just a *wee* bit of trouble
swallowing the concept that they didn't have enough to launch a new
model. Especially considering that the complete startup costs for
the PT Cruiser were less than $600 million (Chrysler had over 30 times
that amount in liquid cash reserves at the time.)
: Without Daimler,
: Chrysler was in real trouble. I am a corporate bond trader. My job is
: analyzing balance sheets and Chrysler had gone from the most efficient
: domestic auto maker in bringing cars to market to the least efficient.
That is the complete opposite of what I have heard. The Viper set
industry records in the amount of time it took to go from concept to
production. IIRC, the Intrepid was the very first "paperless" automobile;
the first car to be completely designed via CAD, and also tested via
computer. In fact, based on accounts I have read, Chrysler's efficiency
was a huge reason why they were so attractive to DaimlerBenz in the first
place. Mercedes-Benz had a reputation for quality, but their design and
build proccess was notoriously inneficient. That was a part of the pitch -
MB quality would bleed over into Chrysler and Chrysler's efficiency would
bleed over into MB.
: When
: they first showed the PT to Daimler executives the Daimler people loved it.
: The Chrysler boys told them for production they wanted to use a modern front
: end instead of the retro model. Daimler insisted on the PT we have now.
That's the first I've heard that story. Do you recall where you
heard it? I wasn't able to verify it one way or the other via a 'net
search, unfortunately. Chrysler had been working on what eventually
became the PT Cruiser for 5 or 6 years, so it seems strange that they
would want to make such a drastic change after refining it that far.
Especially given Chrysler's recent reputation for creating production
vehicles that so closely matched their concepts. I usually see Brian
Nesbitt at the Carlisle "celebrity" luncheon every year; I'll have to
remember to ask him about that. (Heh - that is, assuming he's still
allowed on the grounds after jumping ship to GM!) ;-)
: Without Daimler, Chrysler would have fallen to junk status. This means they
: would have to pay through the nose for financing. This is important as
: Chrysler Ford and GM make money only through their finance divisions now.
: They all build cars at a net loss.
I'm not really up to speed on the finance end of things, but this is
also something that runs counter to what I have heard. The last I knew,
Ford was making something like $10K on every Explorer, and although it
was not uncommon to hear about an auto manufacturer selling a special
vehicle at a net loss (i.e. Viper) to boost brand recognition, that was
the exception rather than the rule. Who knows, maybe this has changed
in the past few years, but it seems to run counter to common sense.
Especially given all the 0% financing deals they seem to be pitching
lately. Given a sale price of $30,000, a standard 5 year car loan at 5%
would net the auto manufacturer just under $4,000 in interest. I'm being
somewhat conservative by picking a rather high sales price and interest
rate - I suspect most vehicles are closer to the low $20s and I have seen
interest rates MUCH lower than 5%, especially on new cars. (Again,
many times, 0%). Even assuming that the car manufacturer is getting the
$4,000 interest, they aren't actually getting it all at once. Due to
inflation and because the company does not have that money to reinvest
until a payment is actually made, each monthly payment is actually
worth less than the previous one. So that $4,000 will drop in value
by the time they have collected the entire loan. ($4,000 today is worth
more than $4,000 tomorrow) I'm no expert (obviously) but it doesn't
seem like an auto manufacturer would be able to sustain themselves on
financing alone. That doesn't make a lot of sense even assuming they
were to sell each vehicle at cost, let alone at a loss. They buy the
materials, pay people to put it together, and sell it at a loss, holding
onto all of that debt over 5 years just to get back a piddly $4,000,
which needs to bring sale back to the break-even point and then above
for a profit? Something just doesn't add up there.
: Counter me if you want, but it is the
: honest truth. I have corresponded with Dieter Zetsche. He is actually a
: classic Mopar fan.
I have no beef with Dieter. He seems like a decent guy, and no doubt
he is doing good things for the company. He's a Daimler guy that was
plopped into place by the parent company. Its good that he is a classic
Mopar fan, there are absolutely worse people who could have been picked
for the job. That said, when it all comes down to the line, he isn't the
one pulling the strings. Daimler and Schrempp are at the top of this
particular pyramid. If I'm annoyed at anyone, its people like Bob Eaton
who participated in the "merger" and allowed it to happen. Although there
was a documented effort to distort the truth and sugar coat the merger,
ultimately the stock holders who voted for it need to shoulder some of the
blame. Without those votes, it wouldn't have happened. Schrempp and Eaton
led them down the primrose path, the stockholders saw green and voted with
their wallets instead of their brains.
--
-Jon-
.-- Jon Steiger ---- jon@dakota-truck.net or jon@jonsteiger.com --.
| 1970 Barracuda - 1990 Dakota 'vert - 1992 Ram 4x4 - 1996 Dakota |
| 1996 Intruder 1400 - 1996 Kolb FireFly - 2001 Ram QC 3500 CTD |
`------------------------------------ http://www.jonsteiger.com --'
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