Tag Archives: Chrysler

Chrysler Introducing All-New Midsize Car

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New Car Coming to Take Avenger's Place in the Midsize Auto Market
New Car Coming to Take Avenger’s Place in the Midsize Auto Market

Come early next year Chrysler plans on unveiling a completely redesigned midsize car to replace its present cars in that niche, the Chrysler 200 and Dodge Avenger. The new model is sorely needed if Chrysler wishes to be competitive in the most popular part of the US car market.

Company executives announced on Tuesday that the cars will be built in the same factory where the Avenger and 200 are built now, in Sterling Heights, Michigan, just north of Detroit.

The two models were first launched in 2006, with one update three years ago. Today they have the distinction of being the oldest cars in the midsize market. They are priced far below just about all their competitors, but they are also noisier, have less pleasant rides and worst of all, have poorer gas mileage than the more recently released competition, such as the Toyota Camry and Honda Accord.

The midsize auto market is a fiercely competitive niche, responsible for the largest percentage of car sales in the country and Chrysler’s choices are not doing well.

Sales for the Avenger and the 200 reached 136,000 as of June, which is higher than last year’s sales, but still not enough to make the cut. Compare that figure to Toyota’s sale of close to 208,000 Camry’s, and Honda’s sale of 187,000 Accords, and you can see why Chrysler feels a need to change.

The new model will most certainly be built utilizing component parts designed together with the Italian car maker Fiat SpA, the majority owner of Chrysler.

New Academic Study Says Chrysler Bailout was a Mistake

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Brian Kelleher Richter

A just-released study conducted by academics concluded that the $12.5 billion government bailout of Chrysler in 2009 actually harmed the company more than if the government would have left them on their own.

Economist Brian Kelleher Richter and colleagues Adam Fremeth and Guy L.F. Holburn showed that Chrysler’s sales were 20 percent lower after the bailout than they would have been if the company had to fend for itself. That is true, according to the study, even if Chrysler would have had to declare bankruptcy, (which it did do, anyway), and even if its factories had been purchased by other car manufacturers. The study does not give an estimate for the worst case scenario that politicians and employees and Chrysler were worried about: that is the liquidation of Chrysler, selling the company for parts and the complete closure of its factories.

The damage done by the bailout to Chrysler as a company involved the bad reputation it gained, a higher turnover at the executive level and disputes between Chrysler’s managers and their government supervisors.

Richter stated that his study cannot answer the question which is at the heart of this Tuesday’s presidential debate: Is it worth risking billions of dollars in taxpayer’s money to save many thousands of jobs. The Chrysler investment ended up as a $1.3 billion loss for the Treasury department, and from the standpoint of management, Richter said, “this was a bad way to go about it.”

“In terms of the larger public-policy question, it’s hard to say” whether the bailout made sense, Richter said. “But the company itself should have said `No, we shouldn’t do this.’ The CEO should have said, as a fiduciary for the shareholders, I should just sell it off piecemeal.”