THE BLOG

Chrysler Is Kaput

06/03/2009 05:12 am ET | Updated May 25, 2011

In December, 1956, Chrysler Corporation's president "Tex" Colbert issued the following apology to his company's dealers: "At the moment we are embarrassed -- and seriously -- by a shortage of automobiles." And embarrassed he was. Despite expanded production capacity to meet expected demand for the 1957 product line of Chrysler, actual customer purchases far exceeded projections. That was Chrysler, then.

And now? On the verge of extinction, having initiated bankruptcy proceedings, a torrent of unsold inventory clogs dealership lots, while the dying company seeks to decapitate those same dealerships. In just over half a century, how did Chrysler, and the wider domestic automobile industry, traverse the road from riches to ruin? It is a complex story, far too long to be fully documented in this space. However, there are a couple of themes related to Chrysler's imminent demise that warrant reflection.

In 1957, engineers, real practitioners of the automotive art, still had a significant voice within the corporation, alongside the finance and marketing gurus. In fact, Chrysler at that time was renowned for the quality of its automotive engineering. In 1957, its hemi V-8 engines were considered among the finest mass produced powerplants in the industry. Its TorqueFlite automatic transmission was unsurpassed by any of its competitors. In 1957, Chrysler introduced torsion bar suspension on its vehicles, making them the most roadable American cars of their era. And not only in engineering was Chrysler dominant. In the late 1950s, Virgil Exner created the "Forward Look" for Chrysler, making the company's cars among the most cleanly and beautifully styled on the American road. At that time, what were then Toyota, Nissan, and Honda were technologically and stylistically light years behind the supremacy of Chrysler.

Sadly, in 2009, we observe this once proud and powerful automobile company in a state of lethargy, with the embalming fluid about to be poured over the scattered remnants of its once thriving industrial empire. When we reflect back on the forces that led to the downfall of Detroit, and especially Chrysler, we see the inverse of what occurred in Japan. As solid engineering became redundant in Detroit, largely replaced by so-called "badge engineering," Japanese firms built up the quality of their automotive engineering to a point where it ranked as world class.

When Toyota decided to create a luxury brand, Lexus, they did not merely slap a Lexus grill and some extra chrome on a jazzed-up Toyota; they invested in the most sophisticated engineering available to insure that a Lexus would be perceived by consumers as a first rate product. Chrysler, along with the other Detroit automakers, preferred to use common chassis designs and powertrains, and differentiate their brands with a different badge on the grill, and perhaps an opera window on their luxury models.

American consumers caught on, and began deserting the domestic car manufacturers in droves for the Japanese alternatives. Too late, Detroit began to recognize some of its mistakes. When the Global Economic Crisis exploded, demand destruction shrank the American automobile market by millions of units annually, at the same time that Detroit was losing market share.

Now the course of history is supposed to be reversed by, of all things, a bankruptcy filing. Is President Obama, as sincere as he is, really serious in believing that this is the path to a renaissance for Chrysler?

We are also informed that the Italian automaker, Fiat, will help to save Chrysler by offering its own automotive technology. The same Fiat that had a disastrous commercial experience in the United States, abandoning the American car market decades ago. Fiat may have excellent experience and engineering for the European car market, but to expect a merger with the Italian firm to prove more efficacious than Chrysler's previous calamitous merger with Daimler-Benz, is simply whistling Dixie in the dark.

Chrysler is headed for oblivion, and the history books. The late "Tex" Colbert must be turning in his grave, aghast that the successful industrial behemoth he once ran so successfully is left with the forlorn hope that technology imported from Fiat is the path to salvation for a company that once stood at the top of the world in engineering excellence.

This epic is more than tragic. It is a metaphor for the reasons why the U.S. economy, once the center of manufacturing for the world, is in free fall collapse.