Sunday, February 18, 2007

Chrysler: The canary in the "big car" coal mine?

This week DaimlerChrysler announced some pretty significant job cuts. The affected plants are located in Michigan, Ohio, Indiana, and Ontario -- speficially, those involved in the production of sport utility vehicles, pickup trucks, and other large vehicles. These types of vehicles, we're told by DaimlerChrysler, are just not selling as well as they used to. This is certainly not just a Chrysler-specific phenomenon. Rather, it is early evidence of the eventual move towards smaller vehicles in North America. Although the general public is not clamoring for small cars quite yet, there is an unmistakable trend towards higher fuel efficiency. This the first step. Unfortunaely for Chrysler, they are not very well positioned for the "small" future -- their smallest vehicle available is the PT Cruiser -- perhaps destining them to be just a small player in the auto field. There is currently a lot of buzz around about Daimler spinning off Chrysler, and business news headlines are filled with talk of potential buyouts or mergers (particular with GM). If I were a potential suitor looking at Chrysler, I would only value it as a future niche player; they are pretty good at making "pimp-mobiles" after all, such as the Chrysler 300 that's still a hot item in the hip-hop world.

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