Chrysler in Trouble

Chrysler in Trouble
Case Code: BSTR338
Case Length: 21 Pages
Period: 2008-2009
Pub Date: 2009
Teaching Note: Not Available
Price: Rs.300
Organization: Chrysler Motors LLC.
Industry: Automobiles
Countries: US
Themes: Managing in Trouble Times, Slowdown in Global Automobile Industry, Bankruptcy
Chrysler in Trouble
Abstract Case Intro 1 Case Intro 2 Excerpts


The Failed Merger with Daimler-Benz

In May 1998, Chrysler Corporation and Daimler-Benz AG (Daimler), a German automobile manufacturing company founded in 1926, agreed to combine their businesses in what they called a "merger of equals." On November 12, 1998, the merger process was completed...

Chrysler asks for Financial Aid

In 2007, Chrysler reported a net loss of US$ 1.6 billion. The company's financial problems continued in 2008, due to declining sales (Refer to Exhibit I for Chrysler's annual US Sales between 2000 and 2008). In October 2008, Cerberus and General Motors Corporation (GM) engaged in discussions regarding the merger of GM and Chrysler...

The Bankruptcy

On April 30, 2009, Chrysler and its 24 wholly-owned US subsidiaries, filed for bankruptcy. However, Chrysler's Mexican, Canadian, and other international operations were not part of the bankruptcy filing. The company filed the bankruptcy under Section 363 so that it would be able emerge from bankruptcy within 30 to 60 days...

The Chrysler-Fiat Alliance

On May 05, 2009, Chrysler filed for bankruptcy. The company announced that it had reached an agreement to establish a global strategic alliance with Fiat (Refer to Exhibit III for logos of Chrysler and Fiat)...

What Went Wrong?

According to the analysts, the major reasons for Chrysler's present financial problems were its poor business strategy, lack of innovation, and the global financial crisis. According to David Lewis, Professor at University of Michigan's Ross School of Business, "In recent decades, it's had a more turbulent time, with more ups and downs than other automakers. Each decade, it seemed that Chrysler had a crisis."...

The Challenges

Some analysts expressed doubts over the success of the Fiat-Chrysler alliance. They opined that one of the major reasons for Chrysler's declining market share before its bankruptcy filing was lack of appealing and innovative models, which would continue even after the alliance with Fiat...


Exhibit I: Chrysler's Annual US Sales (2000-06)
Exhibit II (A): Highlights of the Three Alternatives Mentioned in the Chrysler's Restructuring Plan for Long-Term Viability
Exhibit II (B): Highlights of Chrysler Restructuring Plan for Long-Term Viability
Exhibit III: Logo of Chrysler and Fiat
Exhibit IV: Synergies of Chrysler-Fiat Alliance Mentioned in Chrysler's Restructuring Plan for Long Term Viability
Exhibit V: Chrysler US Sales in April 2009
Exhibit VI: Screenshots of Chrysler's Global Corporate Advertising Campaign

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