Case-Study:
“Chrysler in Trouble?
Or How to Cope with Credit Crunch
Aftereffects”
“On April 30, 2009, Chrysler and its 24 wholly-owned US
subsidiaries, filed for bankruptcy. The company filed the
bankruptcy under Section 363 so that it would be able
emerge from bankruptcy within 30 to 60 days...”
Problem: One of the most successful American
automakers filed for bankruptcy but managed “to
stay in the saddle” in automobile industry”.
Objective: to scrutinize the problem and
find the answer to the question: “What
measures helped Chrysler LLC “stay
alive?”
Keywords:
__________________________________
Chrysler Motors LLC, Bankruptcy Protection, Fiat SpA,
Voluntary Employees' Benefit Association, US Treasury
Department, Federal Loan, Restructuring Plan for Long
Term Viability, United Auto Workers, Canadian Auto
Workers, Debt Restructuring, Bob Nardelli, Global
Financial Crisis, Business Strategy, Lack of Innovation,
Lee Iacocca, DaimlerChrysler Merger, Merger of Equals,
Restructuring Plan, Fiat-Chrysler Alliance, Powertrain
Technology, Fiat's Global Distribution Network, Strategic
Partnership, Winding Up of Operations
-1Background
“Chrysler used to be the third largest automaker in the US.
Chrysler's inability to launch vehicles in accordance with
customers' requirements and poor business strategy resulted in
declining auto sales. Moreover, the global financial crisis in
2008 worsened the situation further; Chrysler found it
increasingly difficult to continue its operations. To overcome its
problems, Chrysler approached the US government for a loan.
The company received a federal loan of US$ 4 billion in January
2009 out of the requested amount of US$ 7 billion. In order to
get additional federal loan, Chrysler was asked to establish an
alliance with Fiat SpA (Fiat) on or before April 30, 2009,
restructure its debt and negotiate with UAW (United Auto
Workers) and CAW (Canadian Auto Workers) to reduce costs.”
-2Opinions
"For too long, Chrysler moved too slowly to adapt
to the future, designing and building cars that
were less popular, less reliable and less fuel
efficient than foreign competitors."
Barack Hussain Obama, President of the United States,
in April 2009
"More than anything the consumers are very hesitant to do business
with a manufacturer in bankruptcy."
Peter Grady, Executive at Chrysler, in May 2009
"This partnership (with Fiat SpA) transforms Chrysler into a vibrant
new company with a wealth of strategic advantages. It enables us to
better serve our customers and dealers with a broader and more
competitive line-up of environmentally friendly, fuel-efficient highquality vehicles."
Bob Nardelli, Chairman and CEO of Chrysler LLC, in May 2009
3Questions for discussion:
1) Study the official site of
Chrysler
LLC
http://www.chrysler.com/
en/
2) Analyze the reasons for
the financial problems
faced by Chrysler.
3) Study the rationale for poor business performance
of
Chrysler
in
the
recent
years.
4) Evaluate the alliance between Chrysler and Fiat
and
examine
its
potential
synergies.
5) Analyze the future challenges of Chrysler.
-4Watch EMINEM’s Super Bowl 2011 Chrysler commercial “Imported
from Detroit: Born of Fire”. How does it help to restore the image of
the company?
How do you understand the phrases:
-“That’s our story”?
-“When it comes to luxury it is much about where it’s from as who
it’s for”?
-5Back to OBJECTIVE.
“What
measures helped Chrysler LLC “stay
alive?”
Give the written report (450 words) and present
it in front of the class for further discussion.
Possible formats:
-annual report;
-survey;
-newspapers article;
-trends comparison;
-etc.