Payne: SUVs saved Chrysler Henry Payne/ The Michigan View.com
Chrysler and the White House will celebrate the Detroit icon's $5.9 billion repayment of government loans Tuesday in a ceremony that will be hailed by both sides for the same reason: The government bailout had become a liability for both entities.
In fact, government-free Chrysler is hardly off the debt hook, but is simply refinancing its debt with private rather than public debt-holders. For its part, the U.S. government will still have a 6.6 percent equity stake in Chrysler - but by removing itself as the company's loan shark, the White House can boast of the unpopular bailout's success in returning taxpayer loans 6 years ahead of schedule. That's an important sound-bite in an election year.
But there is one inconvenient truth you won't hear at the Sterling Heights, Mich. ceremony: Chrysler wouldn't be here had it not defied its green White House masters. Chrysler's return to profitability is a direct result of the fabulous success of its SUVs.
The White House hand-picked Fiat to shepherd Chrysler out of bankruptcy in June, 2009 because of Barack Obama's obsession with remaking Detroit's automakers in the image of their European peers. Convinced that Americans craved small cars to fight the warming scourge, the president demanded Fiat bring its best-selling 500 Eurobox to the States as part of the acquisition deal. Obama was convinced that Fiat could reform the immoral, gas-swigging, SUV-dependent Chrysler.
The exact opposite occurred.
Two years later, the little 500 is about to go on sale in dealer "boutiques" - but it is the resurgence of America's appetite for trucks that has brought Chrysler back from the dead. Chrysler Group reported sales were up 17 percent to 1.1 million vehicles in 2010 on the strength of its wildly popular, redesigned Jeep Grand Cherokee and Dodge Durango SUVs. For CEO Marchionne, the SUVs success in the U.S. market has been a revelation and he is planning to expand the SUV lineup into Europe with Alfa Romeo and Maserati-badged trucks. Marchionne is no starry-eyed green - he has realized that trucks like the Cherokee typically rake in twice the per-vehicle profit of cars (thus the beleaguered company's speedy repayment of U.S. loans).
Chrysler's truck sales - largely ignored by Obama's green media parrots - has also been good to UAW workers as Chrysler's Detroit assembly plant is now at full, three-shift capacity.
But there is one more inconvenient truth: Chrysler has been here before.
After it repaid its 1980s loans under the legendary hand of Lee Iacocca, Chrysler was unable to diversify into smaller vehicles.Today, as the truck boom fades before the specter of $4-a-gallon gas, Chrysler is still heavily dependent on truck sales.
Chrysler is back. But is it just 1980s déjà vu all over again?
Gee, I wonder why the new JGC is selling so well?: Under the hood, the 2011 Jeep Grand Cherokee gets an all-new 290-horsepower 3.6-liter V6 that's vastly more powerful and fuel-efficient than last year's woeful V6.
You're kidding yourself if you think Chrysler can survive w/out a competitive compact car. Chrylser YOY numbers aren't that impresive when you consider the fact that they're being compared to historic lows, and the fact that virtually every vehicle they have is redesigned or refeshed (200, 300, Challenger, Charger, Durango, Grand Cherokee, etc...) this year.
Good for Chrylser, but they're toast in the long-run w/our a competitive compact:
Compact cars are flying out of dealerships compared with this time a year ago as buyers snap up appealing new models and respond to higher fuel prices.
Automakers expect a new vehicle to spend about 60 days at a dealership before selling.
That's the industry average; faster is good, slower is bad. Quick sales -- fewer "days to turn" in industry jargon -- generally mean a model is selling well, at a good price and without much money spent on incentives and promotions.
Some of the days-to-turn champs right now include the Chevy Cruze, which is selling in just 32 days; Ford Focus, 54 days; Volkswagen Jetta, 40 days, and the Hyundai Elantra, which barely has time to get dusty in its average 12 days at the dealership, according to AutoObserver.com.
Those compacts are not only selling faster than the industry average, they all sold in less time in April than they did in March.
The average wait to sell for all compacts was 51 days, down from 63 in March. Compacts as a class and most individual models sold faster this year than in 2010, according to the data.
"The numbers are very telling," AutoObserver analyst and senior editor Bill Visnic said. "The shift to smaller cars is real."
Virtually all the cars that sold faster last month also sold in greater numbers this year.
The Focus is an exception, but production of the new model began very slowly this year. Ford's slick new compact should catch up with and exceed its predecessor this month.
The Jetta sells in small numbers, but its sales surge shows VW is on the right track with its strategy of cutting prices and features to compete head-to-head with American and Asian models.