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: Problem: One of the most successful American automakers filed for bankruptcy but managed “to stay in the saddle” in automobile industry”. Objective: 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

-1- Background -1- Background “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.”

"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 Opinions "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 high- quality vehicles." Bob Nardelli, Chairman and CEO of Chrysler LLC, in May 2009

3- Questions for discussion: 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. 1) Study the official site of Chrysler LLC en/ 2) Analyze the reasons for the financial problems faced by Chrysler.

Watch EMINEM’s Super Bowl 2011 Chrysler commercial “Imported from Detroit: Born of Fire”. Watch 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”?

-5- Back 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.