May 14, 2009 Timeline: How Chrysler Crashed
On May 14, 2009, Chrysler left 789 dealerships, about a quarter of its dealer base, out in the cold by rejecting their franchise agreements and giving them about a month to sell all their remaining new cars, factory parts and service equipment. After almost 95 years selling Dodges, Reed Brothers was one of the 15 dealerships in Maryland and 789 dealerships nationwide notified by Chrysler that their franchise agreement would not be renewed.
Here is a timeline on how Chrysler crashed:
Walter P Chrysler purchased the Dodge company and swiftly built a portfolio of auto brands including Plymouth and Chrysler. Within five years he was competing with Ford and General Motors.
After the 1973 energy crisis Chrysler’s range of big gas-guzzling cars and a couple of recalls left it with big problems. The legendary Lee Iacocca was hired in 1978. With the help of government loans, the former Ford executive rescued the firm and rebuilt it during the 1980s, buying Jeep along the way.
Iaccoca retired in 1992. In 1998 Chrysler merges with Daimler-Benz in a $37bn deal to become DaimlerChrysler, based in Germany. It was supposed to be a merger of equals, but Daimler was in the driving seat and Chrysler swiftly fell into losses.
February 13,000 job cuts announced. Daimler says its open to offers for Chrysler.
April Activist investor Kirk Kerkorian tables a bid for Chrysler.
May Daimler sells 80% of Chrysler to private equity group Cerberus for $7.4B. The German group retains a 20% stake.
October General Motors reported to be in merger talks with Chrysler. Nissan considers bidding for 20% of Chrysler to add to its alliance with Renault. Chrysler announces 5,000 job losses. Daimler says its 20% stake is worthless.
November Chrysler boss Bob Nardelli says the firm needs merger or bailout to survive. Sales down 35% in a year. GM asks US treasury department for $10bn so that it and Chrysler can merge. Cerberus demands $7B from Daimler to cover post-acquisition losses. German group says claims are baseless.
December The Senate refuses the bail-out. Chrysler says it is short of cash and likely to file for bankruptcy. All plants to close for a month. President George Bush finally approves a $13B rescue loan for the big three US carmakers.
January US government provides $4B cash. Chrysler reported to be in talks to sell assets, maybe the Jeep brand, to Renault. Fiat proposes taking 35% stake in return for access to technology and overseas distribution networks
March Nardelli backs Fiat plan to save jobs and asks government for another $5B. Obama gives Chrysler 30 days to do a deal with Fiat – or go bankrupt.
April Chrysler’s banks talk to US government about debt for equity swap