One of the auto industry's main arguments against settling things in bankruptcy court has been the notion that consumers wouldn't buy cars from a bankrupt company.
Now that Chrysler is in bankruptcy, it will have to find a way to convince car buyers that it's still alive -- and it could serve as an important test case for the efficacy of restructuring car companies in bankruptcy. If Chrysler succeeds, President Obama may opt to have General Motors (NYSE: GM) follow.
The Wall Street Journal reports (subscription required) that "Chrysler LLC is preparing to launch a marketing campaign to reassure customers and potential buyers that the auto maker is still alive and expects to bounce back from its bankruptcy filing."
The ads will reportedly feature the rather insipid and suspiciously Saturn-esque tagline: "We're building a better car company. . . . Come see what we're building for you." Apparently that won out over: "We're here, we're bankrupt and the federal government is guaranteeing our warranties."
The bankruptcy of Chrysler has, at least temporarily, reduced a lot of the uncertainty and speculation surrounding the company. Now that the company is bankrupt, we know that we don't have to worry about the warranties. I would argue that it makes just as much sense to buy a Chrysler today as it did a month or a year ago. Hopefully car shoppers will recognize that and the bankruptcy and revitalization of Chrysler will serve as a model for dealing with the much bigger problem of GM.
The bankruptcy of Chrysler has, at least temporarily, reduced a lot of the uncertainty and speculation surrounding the company. Now that the company is bankrupt, we know that we don't have to worry about the warranties. I would argue that it makes just as much sense to buy a Chrysler today as it did a month or a year ago. Hopefully car shoppers will recognize that and the bankruptcy and revitalization of Chrysler will serve as a model for dealing with the much bigger problem of GM.
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