What does the Chrysler bankruptcy mean to you?

Chrysler’s Chapter 11 filing marks the first time a U.S. carmaker has gone into bankruptcy since Studebaker did so in 1933. While it’s far too early to know what all the ramifications of this will be, or what the possible partnership with Fiat will bring, we thought we’d shed some light on the questions we’re hearing the most often.

Will owners of Chrysler vehicles be able to get service and warranty support, especially with more anticipated dealer closings?

You don't need to take your car to a dealership for servicing; a good independent shop that specializes in your brand should be able to handle routine maintenance and repairs. In fact, a recent Consumer Reports survey indicates higher customer satisfaction with independent shops than with dealers. But you do need a dealer for warranty and recall work. If yours goes out of business and there isn’t another nearby, call the automaker's customer-assistance number in your owner's manual to find one. During the restructuring periods for Chrysler and General Motors, the federal government is backing the manufacturer warranties to bolster consumer confidence. If a participating manufacturer goes under, the government will facilitate warranty work through another auto service provider. 

Is now a good time to get a good deal on a Chrysler, Dodge, or Jeep?

If you’re planning to keep a car for a long time and you’re not worried about resale value, now could be a great time to make a deal. There’s a lot of inventory on dealer lots, and the bankruptcy will probably scare away some of the few buyers out there. Chrysler will idle is plants for several weeks during the restructuring, leading to inventory reduction and likely lessening the available deals and negotiation space. Keep in mind that no current Chrysler, Dodge, or Jeep is recommended, due to shortcomings in reliability and/or test scores.

What does Fiat bring to the table? Are there new models to watch for?

Most importantly, Fiat brings a willingness to transform Chrysler into a profitable entity. Further, Fiat is looking to share is powertrains, technology, and platforms with Chrysler, enabling the truck-heavy American company to balance its product portfolio with more, and hopefully better, small and midsize vehicles. Chrysler is expected to sell the Fiat 500 (Cinquecento) as a competitor to the Smart, and Alfa-Romeo Mito to compete with the Mini Cooper. We also hear that it might base its next-generation Caliber on the small Fiat Punto, and that the next Sebring might also be based on a Fiat platform. Working together, both automakers should gain economies of scale, and Fiat will have a means for manufacturing and selling cars in the United States. Any models considered for quick import will first need to be federally certified for U.S. sale, including both emissions and crash testing. Some estimates suggest it will be 18 months or more before a Fiat product is sold in the States.

Should buyers be concerned about Fiat reliability, based on their spotty reputation in the U.S. 30 years ago?

An unfortunate joke once asked, “What do the letters in Fiat stand for?” The answer was, “Fix It Again, Tony.” In fairness to the Fiat of old, cars in the 1960s and ‘70s had more problems than even the average model today. In June 1974, we reported that the Fiat 124 had above average “predicted repair incidence” for the first year of ownership, and was average for the next three years. But we also said our test car came with some 35 assorted defects, including misadjusted valves and a seat belt warning light and buzzer that wouldn’t shut off.

It will take some time for CR to gather data on new Fiats sold in the U.S. But British consumer publication Which? Car ranks Fiat as 35 out of 38 makes in reliability. Chrysler is at the bottom of their list. (Read: “Chrysler and Fiat reliability–Merger of equals?”) Be less concerned about Fiat’s decades-old reputation than its current performance.

We will continue to monitor this fast-moving story, reporting here in the Cars blog and also updating advice and news on the Auto Crisis hub.

—Jim Travers

Comments

[Greg Mars]

Fiat's current performance? Their parent company is diverse and experiencing problems in several divisions.
As for their automobile division, they are trying to break into the
"new economy" societies of China and India with cars that would not be
allowed to be sold in the USA because of strict regulations and controls. So really, what do they know about making eco-friendly vehicles in the USA?
In addition, Chrysler states that "With our partenership with FIAT, within two years, we plan to offer vehicles that will get 40/mpg."
The 2004 Toyota Prius I drove back in the day got a combined 43/mpg
and the 2009 Prius I'm driving now gets a combined 50/mpg five years later!
This buyout/merger -union between Chrysler and Fiat is already behind the times (SEE:2004 Toyota Prius) and they haven't even started yet!

[Larry V]

I have been trying to negotiate with several Cadillac dealers for a 2009 CTS. The only offers come from GM's current rebate $2500. My question, why wouldn't a dealer with 15-20 CTS's on its lot, as late as May 15 not offer some "dealer discount"
I am the guy GM and other American auto manufacturers are looking for. I am definitely buying a new vehicle. I have driven everything but American for over 30 years, primarily due to poor craftsmanship on the part of American manufacturers, their lack of quality control and reliability which all equals low customer satisfaction.
With bankruptcy looming and the possibility of dealerships closing there doors, I ask, why not make a deal?