What's Next For Chrysler?

The Chrysler that emerges from bankruptcy will bear almost no resemblance to the iconic company founded by Walter Chrysler 84 years ago. It will be a division of the Italian carmaker Fiat whose largest shareholder is the United Auto Workers.

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ROBERT SIEGEL, host:

For some analysis and history behind today's announcement, we turn now to NPR's Frank Langfitt. He covers the auto industry, and he's been working the Chrysler story in Detroit this week.

Frank, we know the details of this attempt to save Chrysler, but in the grand scheme of things, why is President Obama doing this?

FRANK LANGFITT: Well, you know, Robert, as the president said, this is all about jobs. And frankly, from a pure business calculation, if you talk to a lot of analysts here in Michigan, they would say Chrysler, probably best to sell off in parts. But, you know, it's a weak company. There's a brutal market out there right now. But I think the White House thinks that those huge job losses would just be too big in this deep recession. And you've also got this symbolism, the idea of this famous American brand going through a fire sale.

SIEGEL: Well, let's look at the deal from the other side. What's in it for Fiat?

LANGFITT: This is actually a really good deal for Fiat, I think, from a lot of people's perspectives. First of all, the company doesn't have to put any money into Chrysler, just technology and engines. And the big thing that Fiat gets is access to the U.S. market through all these Chrysler dealers. Now you remember back in the 1980s, Fiat actually had to leave the United States. It had these poor-quality vehicles. And back then, owners complained that Fiat stood for Fix It Again, Tony. Well, they're making a lot better vehicles now in Europe, and this really marks for them kind of another chance to get back to the States.

SIEGEL: Well, does Fiat have any other obligations, though, as part of the deal?

LANGFITT: Yes, it does - a couple of really, I think, important ones. Most people think that Fiat only wanted parts of Chrysler - maybe parts of the dealer network, maybe the Jeep brand, which is kind of known all over the world. But under this arrangement with the government, it has to take most of Chrysler. And by doing that, Fiat kind of indirectly will save, I think, probably a lot of American jobs. Now the U.S. government is going to spend about $8 billion to help Chrysler go through this bankruptcy and exit, but if Fiat wants a majority share in Chrysler, it's going to have to pay that money back first.

SIEGEL: Well, the administration is talking about a very quick bankruptcy, 30 to 60 days. Is that realistic?

LANGFITT: Well, you know, bankruptcy experts are skeptical. I mean, Chrysler -it's the smallest of the Detroit Three, but it's still a big company. It's complicated. And there's certainly going to be some battles. The lenders that Don just mentioned, they're going to push, maybe, for the company to be liquidated, and the government is going to fight back. Certainly, President Obama is going to make an issue out of that. Fiat likes the dealer network, but it wants a much smaller dealer network. Now, from the dealer's perspective, they're independent businesspeople. They've made big investments in their dealerships. They, too, are going to fight in bankruptcy court.

SIEGEL: Now, the collapse in car sales, generally, has been a crisis for the entire auto industry, but Chrysler seems to have been a company in crisis for a long time. What is it about Chrysler that leads the industry into bankruptcy?

LANGFITT: The main thing is since the 1950s, this was the smallest and most vulnerable of the Detroit Three. And, of course, this isn't the first time. Back in 1979, they had another brush with death, had to get federal loan guarantees. What particularly went wrong, I think, in the 1990s, Chrysler made a big bet on SUVs, trucks and minivans, and it did pretty well. But when gas prices rose, the company just didn't have fuel-efficient cars to compete. Quality's also a problem. If you look the - one of the most recent issues of Consumer Reports, the magazine doesn't recommend even one Chrysler product.

SIEGEL: Thank you, Frank.

LANGFITT: Happy to do it, Robert.

SIEGEL: That's NPR's Frank Langfitt, speaking to us from Detroit.

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