Auto Analyst Says Chrysler Will Die Aid Or No Aid

With executives from America's three largest automakers seeking billions of dollars of aid money from the federal government, the question that often pops up is whether the automakers will need additional funding down the road several months hence. The question that isn't being asked is this one: will the aid actually do any good?

One analyst, Michael Robinet, CSM vice president of global vehicle forecasts, says that as far as Chrysler is concerned, the aid money won't save the company. In an interviewed published recently in The Detroit News, Robinet said that the “Big Three” most certainly will become the “Detroit Two” when all is said and done.

The reason for the gloomy outlook? Scalability, for one. Both General Motors and Ford are larger and sell their cars in more markets than Chrysler. In fact, both automakers sell about twice as many cars overseas then they do in the domestic market while Chrysler derives just 10% of its business from beyond the US and Canada.

Robinet puts some of that blame on former parent Daimler AG which kept Chrysler out of foreign markets during its ownership tenure. That statement isn't entirely correct as Chrysler vehicles have found their way to the Americas and to Europe, but the old DaimlerChrysler entity was more concerned with marketing Mercedes than they were Chrysler.

Another area of concern for Chrysler is that there isn't much in the way of vehicle development currently going on. When examining the automaker's entire fleet, very few cars achieve 30 mpg or better fuel economy, something GM and Ford have in abundance. Granted, fuel prices are very low right now, but the long term prognosis is that fuel prices will rise again in the near future. When that happens, Chrysler still won't have a car smaller or more fuel efficient than the 30 mpg Dodge Caliber.

CSM says that the best thing for Chrysler to do is to wind down its operation. The company believes that certain products could survive elsewhere such as the Jeep Wrangler, Chrysler minivans, and the Dodge Ram, but as far as its long term survivability, it isn't going to happen.

Some are calling for Chrysler to end their operations sooner, rather than later. Offering Jeep to GM, sending the minivans to Ford, and allowing Nissan to take the Dodge Ram are some ideas that have recently been aired in the blogosphere.