Chrysler was a bad investment

Chrysler logo

Early on in 2009, when the world economy was in shambles and North Americans feared the worst, the big three domestic auto makers came knocking. GM, Ford and Chrysler were all in bad shape and needed the governments of U.S. and Canada (mostly the U.S. though) to bail them out. They figured it was a fair request because they had just witnessed the U.S. government bail out numerous financial institutions which actually caused the financial crisis in the first place, so it wasn’t a stretch to ask for a slice of the bail out pie as well.

The economies of the United States and Canada are dynamic and rely on many more industries than just automobile manufacturing but, at a time when jobs were dying out, the potential of losing one or more of the big three was a scary thought. Each of the big three was in different stages of viability and potential at the time. Ford was by far the best off and did not actually need a bail out. However, because they were unsure of how bad and long the recession will be, they asked for a multi billion dollar line of credit just as a precaution. GM did need to be bailed out and eventually went in to bankruptcy. However, they had a clear plan for future vehicles that was just at the beginning of coming to fruition. The new GM was undoubtedly a far better company with less redundancies (i.e. number of brands) and very good cars and SUVs.

Chrysler was in the worst shape of them all. Not only were they in deep financial trouble, required a bail out and teetered on bankruptcy. President Obama said at the time that Chrysler did not have an adequate plan for the future and if some other private company with a plan would not agree to acquire them, the government was prepared to let them die. After that, Italian car maker, Fiat agreed to buy the company and the governments came through with a bail out.

Yesterday, Chrysler paid back $1.9 billion of that loan back to the government. However, according to the government, it will still end up losing about $1.6 billion overall in the deal. Moreover, Chrysler is still pumping out awful cars and the only decent new cars in the pipeline are not Chryslers at all, but rather rebadged Fiats. Compared to Ford and GM (not to mention a slew of imports) the Chrysler product line is inferior in every way.

As I said at the time, the best thing for everyone would have been to let Chrysler go in to bankruptcy and move on with actual viable companies. I still strongly believe that eventually Chrysler will go the way of the dinosaurs and this bail out will have only extended their decaying life. The American and Canadian economy and auto sector will be better off without Chrysler and in the long term it will make us more efficient and competitive internationally.

More than anything, we should not give any more money to this company, under any circumstances. I understood the reasoning behind giving money to Ford and GM, but Chrysler has proven that it has not learned how to build a well built vehicle. We should not support that anymore.