For months we have been questioning the fate of America's big 3 automakers, and today one of those 3, Chrysler LLC, made it official and filed for Chapter 11 bankruptcy protection.While no one likes to see a company go bankrupt, in this case, the writing has been on the wall for some time now, and there are plenty of reasons to think that filing Chapter 11 is the best thing for the ailing automaker.
No one needs to panic and start assuming Chrysler is going out of business. We have to make sure that we do not confuse the two situations, and although there is going to be a temporary shut down of auto production at Chrysler, this should only last a short time while the company completes a deal with Fiat that could result in Fiat having a 20% ownership in the company.
The hope is that Fiat will help bring Chrysler a little more up to date in regards to its fuel efficiency technology. This is the path that the Obama administration feels the company has to go to get back to the top again.
In a statement regarding the situation, President Obama said that this was "one more step on a clearly chartered path to Chrysler's revival."
Chrysler has already received $4 billion in loans from the government, and will require around $8 billion more to carry itself through the bankruptcy proceedings. The plan is for Chrysler to emerge from bankruptcy in as little as 60 days with its new Fiat partnership.
If you own a Chrysler, your first thought is probably your car's warranty. Don't worry about this, as the government is going to be backing all the company's warranties.
General Motors Corporation (NYSE: GM) has already been forced to take government aid, and there are still plenty of questions as to whether or not GM will be the next company to go bankrupt. Ford Motor Company (NYSE: F) has so far not accepted any money from the government, and claims that it will not be forced to do so, but time will tell on that.
What are your thoughts about this next step in the Chrysler story? A step in the right direction, or an indication of more tough times ahead?
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Reader Comments (Page 1 of 1)
4-30-2009 @ 6:43PM
Donovan said...
In as much as this may seem, an be somewhat of a setback for Chrysler. Its also a chance for Chrysler to financially and physically business wise, totally rebound.
This bankruptcy is the smartest decision and the most beneficial of decisions Chrysler could have made.
I don't own a Chrysler, nor to I intend to in the near future. How ever, I do wish this automaker and the employees of Chrysler, the very best for a very
successful viable future.