Near-future critical for Chrysler and GM

2009 has certainly been a storied year for the auto-industry. While allowing GM and Chrysler to keep their doors open during a trying time, the bailouts weren’t without drawback however; both companies are now in a come-from-behind situation with regard to brand imaging and consumer perception. Ford has actually greatly benefited as far as those two factors are concerned by being the only U.S. automaker to not require a bailout.

Chairman and interim CEO Ed Whitacre, Jr. has certainly taken GM in the right direction by hitting the reset button on the company’s management team – including naming Microsoft’s CFO Chris Liddell to manage the purse strings in Detroit. James Bell, executive market analyst for Kelly Blue Book, also feels that the company is coming back in a strong way and ought not to be ignored.

Whitacre intends to to pay back the almost $7 billion in federal loans sooner than anticipated, and according to Bell, the reduction in costs that GM was able to secure by way of the bankruptcy makes that possible. He also points out the fact that GM has fantastic products rolling out and that no shopper would be wise to shun the company prior to checking out their line.

A director of research over at IHS Global Insight has concerns, however, of GM losing market share to the point where they will hold a less than 17% share in 2012. GM estimates its share for that period to be about 20%; on par with 2009. To maintain market share, GM must convert Pontiac, Saturn, Hummer, and Saab loyalists over to other GM brands, and therein lies the concern.

Fiat CEO Sergio Marchionne, whose company now runs Chrysler, has a tough challenge ahead with respect to product strategy. The company was helped little by Daimler during their separation and Cerberus Capital Management’s strategies drove the company head-first into bankruptcy. Chrysler does however, have a new Jeep Grand Cherokee planned to roll out soon, but that’s it. While the mid-sized SUV market is not exactly bursting at the seams, it also still remains to be seen whether Fiat-based vehicles will have any appeal to the American market.

George Magliano of IHS, says expects Chrysler’s share to dip from last year’s 11%, to 6.9% by 2012. This would put Chrysler behind Nissan and Hyundai/Kia and will be the tiniest of the top seven automakers that supply the U.S.; a position that could put Chrysler’s mere survival in jeopardy.

It also appears that Chrysler’s loan will not be paid back anytime soon.

– By: Stephen Calogera

Source: Daily Finance

Chris Chin

Chris Chin is the Editor-In-Chief of egmCarTech and is a regular contributor to Automobile Magazine.

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