Chrysler in Trouble

5968 Words Apr 4th, 2013 24 Pages
Executive Summary

The automobile market is one of the most lucrative markets in the world. They have focused on international expansion since the late 1900s. This market has very successful international companies such as Mercedes-Benz, Lexis, Hyundai, Chrysler, Camry, Fiat, etc. All of these firms have held a position in the automobile industry. Even in economic hardships when demand for automobiles was decreased, the market did not faze them. Two firms prominent in this industry are Chrysler and Fiat which have both held successful positions in the late 1900s. Due to decreased market demand and lackluster products both firms have drastically diminished their market appeal. This has led to decreased profits which have led to European
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The employment level first dipped below one million in 2007 and fell to 880,000 workers last year. With the restructuring and bankruptcy of Chrysler and General Motors, and the ongoing recession in the auto sector, employment in the nation 's automotive manufacturing industry will most likely shrink in 2009 and 2010 as additional assembly, powertrain, and auto parts plants close.

Economically the automobile industry is an oligopoly. This is why the Big 3 remains the Big 3. The nature of building cars makes it difficult for small players to enter the market. The cost of entry is high. As an oligopoly, the Big 3 also tend to pay more attention to one another than to customers or competitors. If GM adds airbags, Chrysler and Ford add airbags. Being the smallest, Chrysler tends to follow rather than lead. Ideas generated outside the Big 3 tend to be ignored.

When times are good, automakers can sell anything they can produce. That includes bad cars. But during recessions, automakers lose billions of dollars just maintaining operations. This is basically due to the high fixed costs. And those costs are getting higher as tight union contracts make labor a “fixed” cost.

The industry consists of six segments: three mature markets (North America, Japan and Western Europe) and three emerging markets (Asia-Pacific, Eastern
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