Analysts: After Bailouts, Detroit Must Deliver In 2010 Heading into the new year, analysts say Ford is the healthiest of the Big Three automakers. GM and Chrysler are stabilizing, but they must prove they are worth the $60 billion in bailout money it took to save them.
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Analysts: After Bailouts, Detroit Must Deliver In 2010

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Analysts: After Bailouts, Detroit Must Deliver In 2010

Analysts: After Bailouts, Detroit Must Deliver In 2010

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

This was an epic year for the Detroit auto business. Amid plunging sales and shattered business plans, General Motors and Chrysler were forced into bankruptcies at taxpayer expense. In the coming year, analysts say, both companies have something to prove. GM has to convince consumers it was worth saving and Chrysler has to show that it can survive.

NPR's Frank Langfitt reports.

FRANK LANGFITT: With Chrysler and GM drowning in red ink last spring, the federal government came to the rescue. The price tag for taxpayers who opposed the move topped $60 billion. But President Obama said he couldn't let the automakers fail.

President BARACK OBAMA: In the midst of a deep recession and financial crisis, the collapse of these companies would have been devastating for countless Americans and done enormous damage to our economy.

LANGFITT: Chrysler and GM raced through bankruptcy court faster than almost anyone imagined. They emerged with far less debt, fewer dealers and leaner labor contracts. But so far, the road to recovery has been rocky. This fall, General Motors struggled to sell off weak divisions and announced plans to shut down Saturn and Saab. Then, in December, GM board Chairman Ed Whitacre announced the removal of the second company CEO in just eight months.

Mr. ED WHITACRE (Board Chairman, General Motors): At the monthly meeting today, the General Motors Board of Directors accepted the resignation of Fritz Henderson.

LANGFITT: After a turbulent fall, analysts are optimistic about the next year. In late 2010, GM will launch the Volt, its long-awaited electric car. Jessica Caldwell, is an analyst with, the car consumer Web site. She says after years of hype, the Volt must deliver. But its expected price tag, perhaps $40,000, could hurt sales.

Ms. JESSICA CALDWELL (Analyst, I think for a lot of people that's pretty expensive, especially when you, you know, are looking at essentially, you know, a Chevrolet sedan.

LANGFITT: If GM struggled after bankruptcy, Chrysler fared even worse. As of November, sales were down 38 percent from the year before. At next month's auto show in Detroit, Chrysler won't even hold a press conference. That's because it has no new vehicles to show. Again, Jessica Caldwell of Edmunds'.

Ms. CALDWELL: You know, unlike, you know, Ford, and even GM to a lesser extent, who are, you know, trying to come out with new products and trying to get people back into, you know, their brand and their products and what they're all about, you don't see any of that from Chrysler. And, you know, I think that's pretty scary.

LANGFITT: Chrysler entered into an alliance with Fiat last summer, and the Italian carmaker is now in charge. The company is betting on new, small cars based on Fiat engineering. At a news conference, CEO Sergio Marchionne said the company will begin building the Fiat 500, a small car popular in Europe, late next year.

Mr. SERGIO MARCHIONNE (CEO, Fiat): That's less than 18 months after we formed the alliance, and I believe that it's a record for the North American car industry.

LANGFITT: If any Detroit company has done well in the downturn, it's Ford. The company essentially mortgaged itself before the recession. Armed with billions of dollars in cash, Ford weathered poor sales without having to go begging to Washington. Rebecca Lindland is an auto analyst with IHS Global Insight.

Ms. REBECCA LINDLAND (Auto Analyst, IHS Global Insight): Ford is a really interesting case. They certainly got a lot of positive PR because they, quote, "didn't take bailout money," and they've been able to benefit from that. They've gotten a lot of domestically-minded people that maybe had been Chevy people or Dodge people their whole life, and they've been able to convert them to Ford people.

LANGFITT: Ford still faces challenges. Because it didn't go through bankruptcy, it wasn't able to shed as much debt or get as many union concessions as its competitors. But going into next year, analysts widely view Ford as the healthiest of the Detroit Three, as for GM and Chrysler, Rebecca Lindland says public patience is at an end.

Ms. LINDLAND: Now there's no more excuses. They can't point to too many brands. So, 2010 is really going to be showtime for them.

LANGFITT: Frank Langfitt, NPR News.

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