Less than three years from now, there could easily be three fewer car companies left on the field. One is the victim of a bad marriage, the other a victim of Uncle and the last a victim of its own bad decisions. In no particular order, they are:
The other day, the company posted a withering 81 percent loss, reflecting at least three years of flat-lined sales caused chiefly by a dead-in-the-water model lineup, the result of the company not having the money to invest much in new models.
This circling of the drain was triggered by a disastrous decision several years back to give away cars as a way to jump start sales. You may remember the “zero down, zero interest and zero payments for a year” thing. Wait. You are offering to let me drive off the lot in a brand-new car, without me giving you anything in return except a hearty handshake and my promise to pay you sometime next year?
Lots of people took Mitsu up on their free ride offer. And took Mitsu for a ride. They drove their year-long free loaner like a teenager who got his hands on Dad’s Corvette. Then shrugged at the end of the year, said they couldn’t afford to pay – and let Mitsu have the remains back. This cost Mitsu a great deal of money and not only directly. It cratered the resale values of Mitsubishi vehicles generally as vast fleets of thoroughly trashed, year-old cars hit the back lots of the dealerships.
Now Mitsubishi had to give them away again.
It hasn’t helped that Mitsubishi’s overall track record for reliability isn’t the greatest – and it really hasn’t helped that the company just got busted for fudging the mileage numbers it touted for its cars. Unlike what VW got caught doing (hang on) this actually did hurt the people who bought the cars, as opposed to affronting government bureaucrats.
The sad thing about all this is that Mitsu currently sells what may be the smartest little car Uncle will let anyone buy – the Mirage. Just updated (one of two Mitsubishi vehicles that’s not as dated as parachute pants) this virtually unknown (because Mitsu has no money to advertise it) subcompact is cheap – $12,995 – and gets 40-plus MPG on the highway. It has a not-turbocharged three cylinder engine, so it has simple, probably long-haul-reliable mechanicals. As an A to B transportation appliance, it makes a lot of sense. More sense than a $24,000 Prius .
But if you’re interested, better hurry.
A year ago, VW was Autobahn cruising at 140-plus, one of the most successful brands in the world – not just the United States. One year hence and VW is in serious trouble as a result not so much of having “cheated” Uncle and getting caught doing so – but because the company did a Greaseman-style writhing on the floor mea culpa. Apologizing for its sins, like the once-famous radio shock jock did all those years ago. Some of you may remember – and recall what became of the Greaseman.
The same kind of fate may befall VW.
It would have been a lot less expensive – and far more dignified – to fight Uncle. And, much more important, explain to the public what it did and why. That – yes – it “cheated” federal exhaust emissions tests by programming the cars so that when tested, their exhaust was within the parameters set forth by the increasingly demented EPA’s standards but on occasion, slightly higher out in the real world. Slightly as in fractionally (less than 1 percent, literally) higher out in the real world, under certain conditions, such as wide-open throttle. Which happens even less than fractionally as most of the time, most driving is not wide-open throttle driving.
In any case, there has been no harm done – except to the easily bruised egos of government bureaucrats, who have gone after the company with a disproportionate, Inspector Javert-like rabidity. In order to make a very public point about what happens to those who dare to “cheat” the government.
VW has been verboten from selling any diesel-powered cars – which by itself might have been enough to permanently cripple the company. Then on top of that there is the cost of forced buybacks (half a million cars) fines and litigation – estimated liabilities in excess of $50 billion (not million) dollars.
Because VW did not defend itself – did not explain to buyers the truth about this debacle – the average person probably thinks VW stinks (literally and figuratively) and won’t consider buying one.
It took GM decades to recover from a much less devastating diesel debacle (some of you may recall).
VW may not. $50 billion is still a lot of money, even inflation adjusted.
This one’s not obvious, kind of like a big oak tree that looks solid and alive but is actually hollow and rotting from the inside out.
Note, first of all, that this section isn’t headed FiatChrysler, the formal name of the company. The Italian conglomerate owns Chrysler, which it bought not because it thinks so highly of it but because it needed access to its dealer network, in order to re-establish the Fiat brand in the United States.
And also because Jeep.
These sell in big numbers, infusing Fiat with funds. Which have not been reinvested in Chrysler vehicles. Of which there are now very few – and only one of them (the Pacifica minivan) new. The rest are old (300) or already retired (200). And there is nothing new on deck, either.
How does Chrysler remain viable with a product line that consists of a minivan and an aging sedan and nothing else? Minivans are not exactly selling like hotcakes now – and the 300, while a very nice car, is a very old car. The current (2017) 300 was last updated back in 2011, so it is basically a six-year-old car. Next year, it’ll be seven years old. This makes it an ancient car, in new car terms – when most cars are at least “refreshed” after three years and given a major makeover after about five years go by.
But Fiat – which controls the purse strings – has not committed to any updating until at least 2020, by which time the 300 will be a ten-year-old car.
And the same goes for its Dodge-badged compatriot, the Charger (and Challenger, which is a two-door version of the Charger). What else has Dodge got, by the way? Not much. The Dart is dead and the Caravan minivan is a slab candidate, too. They gave up on the Viper (which is cool looking but had its ass handed to it by the new Corvette) and that leaves the so-so Durango, which is problematic because it’s a “gas hog” SUV and those are going to be harder to build in coming years as federal CAFE fuel economy mandatory minimums ratchet up (unless Trump).
Meanwhile, Fiat hasn’t made much headway. The 500 is cute but that doesn’t always translate into sales.
The 500L belly flopped badly.
Fiat won’t sleep with the fishes. It’s a huge player in Europe. But they may just leave the U.S., as once before. Before they go, they may sell off Jeep – which is still making money- and run like hell for the border.
But Chrysler (and Dodge) are probable goners … unless someone else comes along with deep pockets and willing to empty them.
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