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Chrysler: We’re a safer bet than GM

 
3 1,594 views Mar 20, 2009

Chrysler believes it’s in a better position than GM because it needs less sales to become profitable and repay its loans

Chrysler believes it’s in a better position than GM because it needs less sales to become profitable and repay its loans

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If asked whether General Motors or Chrysler were in a better financial position, many of us would conclude that GM looks better. However, Chrysler's chief financial officer Ron Kolka has come out boasting that Chrysler, "on a pure-business basis," is more viable.

The reasoning behind the claims is that Chrysler needs fewer sales to become profitable and repay its federal loans, which amount to around $4 billion at the moment. GM didn't respond directly to the claims made by Kolka, instead choosing to highlight the steps that company was taking towards achieving long-term viability.

Chrysler is expecting to make a profit within the next five years if the U.S. market can sustain around 11 million new car sales per year over that same time period. However, in the wake of the current economic crisis, many commentators are predicting that auto sales could dip as low as 10 million units this year, which would put Chrysler in a tough financial position if the situation didn't improve within the next few years.

Meanwhile, Chrysler's cash position is said to be healthy, with at least $2 billion in cash on hand for, although this figure could actually be as high as $6 billion. Despite this, the company is requesting more cash, although Kolka explained to Bloomberg that more aid is only needed to ensure that Chrysler will not have any need to come back for more in the near future.

Chrysler is also undertaking negotiations with Fiat to secure a $10 billion deal that would give Chrysler easy access to Fiat's extensive knowledge of small car production. In return Chrysler would offer up a 35% stake as well as its knowledge of SUVs.



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Comments (3)

  1. ma_Chris avatar Chris Posted: 3/21/2009 7:12am PDT

    i had to rub my eyes twice before realizing that i was in fact reading this correctly.

    good way to look at it chrysler.. the problem is,.. its actually concievable that people WOULD BUY enough GM products to dig them out... if they were to drop half of their worst performing vehicles, they would be left with a lot of really good cars that people want to buy and DO buy.

    the only thing that the chrysler brand has that is even moderately desirable are the SRT vehicles. great way to pave the future of frugal driving.
     
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  2. ma_TrelinDTR avatar TrelinDTR Posted: 3/21/2009 4:34pm PDT

    I'm glad to hear that Chrysler sees itself more profitable than GM...GM has FAR too many models and changes to make which is going to drag down their cash on hand. Chrysler has changes to make, but doesn't have multitudes of brands that are either direct replicates of other models are simply cars that don't make much sense because they create competition for their own brands...

    I think Chrysler will be viable within 5 years...if they can get this backing from Fiat and create desirable cars with top-notch quality and reliability, and great gas mileage, then they'll have a good thing going.

    I already know that Chrysler will have me as a new customer within a few months. Probably going to get a new Liberty or Wrangler. There's NOTHING in the pipeline at GM or Ford that has caught my interest. The New Grand Cherokee looks very promising as does the 300. If they can get that 200C going, then they've got a home-run there...That car is sharp, sexy, and obtainable.
     
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  3. ma_Tall Paul avatar Tall Paul Posted: 3/22/2009 11:37am PDT

    Hey Trelin, the sky roof option is cool. I just cannot get over the fact that any viable auto co. still offers a 4 speed automatic in 2009. Especially after their relation with Merc who seems to be obsessed with more gears.
     
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