It probably won’t be much of a surprise to Chrysler followers, but come next Wednesday we’re going to learn just what sort of direction the beleaguered automaker will take when it announces its product plans going forward. With Fiat steering the ship, a number of new models based on Italian technology will underpin upcoming Chrysler and Dodge vehicles, particularly its cars.
Dodge Ram
The announcement is coming as some worry that Chrysler needs to move quickly as customers abandon the automaker in favor of competing brands such as Ford, Hyundai, Kia and Volkswagen. Chrysler has already said that for all intents and purposes its Dodge Ram line will be separated from other Dodge products which also means that the Dodge Grand Caravan and other Dodge models will go away. In their place will be a handful of new models resting on Fiat platforms.
Fiat has indicated that the Fiat 500 (pictured), its popular world car, will be sold through select Chrysler dealers beginning in 2011. The Italian automaker has also said that its Alfa Romeo line will be introduced to the US market, perhaps no later than 2012. Fiat owns a 20% stake in Chrysler, but the company has no plans to pour cash into the struggling automaker, just product lines.
UAW Ownership
Chrysler filed for bankruptcy late this past spring, emerging weeks later with most of its toxic assets left behind. With federal government assistance, Chrysler broke free from its previous parent, Cerberus Capital Management, LP and is now owned by the United Auto Workers (UAW), the US and Canadian federal governments and Fiat. The UAW owns the lion’s share of what is now legally called Chrysler Group, LLC at 55%. Over time, Fiat will eventually increase its ownership to 35% and, if successful, gain controlling interest over Chrysler.
A number of Dodge models will go away over the next few years including its midsize sedan, the Avenger, the Nitro SUV and the compact Caliber. Several Jeep models will be dropped including the bulky Commander, as well as the Compass and Patriot. Chrysler will say good-bye to the aged PT Cruiser and its midsize Sebring sedan. New models based on Fiat platforms will replace some of the vehicles being retired, but not all.
Fiat 500
Fiat plans to build its 500 model in Mexico beginning in 2011, importing that car to the United States. Several other Fiat derived model lines will be built at other factories in North America and sold as Chrysler, Jeep and Dodge vehicles. We’ll have to wait until the Chrysler Group makes its announcement next week to see the outline of those plans.
The United Auto Workers (UAW) and Canadian Auto Workers (CAW) represent the two most important labor unions for GM’s North American operation. Whatever GM’s fate ends up being as it goes through likely bankruptcy restructuring, the two unions will play an important role in the company going forward.
Agreements Reached With Key Unions
Yesterday GM reached a tentative agreement with the UAW and today with the CAW in a bid to get some of their labor costs in line. Though both unions have been giving back to GM for some time, the automaker’s current plight required that GM revisit the union contract once again.
Regarding their agreement with the UAW, GM noted — Changes to the collective bargaining agreements are subject to ratification by UAW membership and approval by GM’s board of directors. The tentative agreements are consistent with the conditions and disclosures made in GM’s prospectus and supplements to the prospectus for the pending exchange offers to bondholders. The financial impact of the terms of the agreement are not expected to be materially different from the viability plan estimates included in the documents for the exchange offers. Details of the definitive terms of the tentative agreement are not expected to be publicly disclosed by GM until after member ratification is complete.
Government Assistance Waiting In The Wings
The CAW accord is also important because with it both the province of Ontario and the Canadian federal government can now provide aid for GM’s Canadian operations. Both governments demanded union concessions which made it easier for GM to extract additional give backs from the normally difficult to work with Canadian union.
UAW workers must still ratify their contract with a similar arrangement forthcoming from CAW workers too. Though neither move will guarantee that GM will survive for the long haul, refusing to concede would likely have meant additional layoffs and plant closings, perhaps requiring the complete sell off of GM assets via liquidation.
Source: General Motors
Further Reading — Holden Cruze Bags Five Star Safety Rating
In the midst of multibillion losses and a historic restructuring of its domestic product line, the Ford Motor Company has made it known that they still need to let 4200 workers go according to a report in yesterday’s The Detroit News.
Meeting with union officials earlier this week, Ford says that additional blue collar workers will need to 
be let go, though they haven’t said exactly by when this must happen. Over the past three years, Ford has trimmed its workforce by 40%; General Motors and Chrysler have also implemented similar labor reductions.
9000 Wanted, Less Than Half That Found
Earlier this year Ford announced a new round of retirement packages to encourage workers to leave, looking for 9000 employees to take up their offer, but having fewer than half that number of people interested in the offer. Though the package is quite generous, many workers are concerned that the present economic climate would make it difficult, if not impossible, for them to find work elsewhere. Hence, the resistance by some to retire now.
To help workers make the transition from Ford to other careers, the company has hosted several job fairs to convince workers to take buyouts and recently created a Web site, www.yourjobconnection.org, in a bid to help workers move on.
Factories Closed, Production Cut, New Cars Planned
Earlier this summer Ford announced that the company would cut SUV and truck production to be more in line with customer demand. With that change, the company closed some factories while converting others to begin producing smaller cars. Ford also announced that the company would bring as many as six small European models to the North American market, building these cars on assembly lines in factories in Mexico, Canada, and the US.
Through August 2008, Ford’s U.S. sales were down by more than 15%, though its smallest car, the Ford Focus, is on track to see year over year increases of more than 25%.
Auto News | Matt Keegan, 28 Oct 09 | 
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