Why Chrysler is like Rover, by Gavin Green

Published: 05 November 2008

I have twice written in CAR – most recently several years ago – that Chrysler is the Rover of America. Each time the Chrysler PR boss in Detroit rang to complain. Now, as Chrysler (like Rover in 2005) stands on the brink of oblivion as a stand-alone maker, it is time to admit a crucial difference. Despite many historical similarities, and their likely similar fates (dead as independent corporations but with one or two extant desirable brands) their epitaphs will indeed be different.

Chrysler, as I write, looks as though it may be subsumed into General Motors. (The PR spin is that they will ‘merge’ but this is no more a marriage of equals than Michael Jackson and Debbie Rowe or the ill-fated 1998 Daimler Chrysler union; nor may the marriage be any more successful – but that is another matter.) So it’s a home-grown answer to the long-running dilemma that’s been causing consternation in American financial, political and industrial circles ever since Jimmy Carter’s administration first bailed out Chrysler in 1979.

Rover, of course, had no domestic saviour, partly because Britain had no other major UK motor maker to do the rescuing. It went to China, where it has now been quaintly rebranded Roewe.

So the end game may be different. But how striking are the similarities before the denouement! In their early days, they were highly enterprising and innovative companies (Chrysler Airflow, Mini – among many other engineering highlights). Even in their latter years, they occasionally – if all too infrequently – sparkled (Dodge Viper, Rover 75). Both were either nationalised or rescued by government money in the ‘70s. Both were bought, in the ‘90s, by rich premium German brands (Daimler and BMW) desperate to expand into the ‘mass market’; both takeovers were lamentable failures; both failures cost their respective high profile German CEOs their jobs (Jürgen Schrempp and Bernd Pischetsrieder).

The jewel in the crown of both makers are, or were, 4x4 brands – Jeep and Land Rover – and both off-road legends will continue to prosper, under different ownership, long after their parents disappear. Both makers were rashly bought by optimistic non-automotive companies hoping to make a quick buck – Chrysler by a private equity investment firm (Cerberus) and Rover by a bunch of Birmingham optimists. Both gambles backfired, despite huge subsidies from Daimler and BMW.

Both companies faltered for the same reasons. They made uncompetitive cars, ceased to innovate and were ill-equipped – financially or technologically – to fight stronger rivals in a brutally competitive business. When overcapacity and weakening economies savage an industry, the weak fall. And just as Britain’s car industry bounced back from Rover’s failure (does anybody now miss Rover or MG?), so the US auto industry will recover from the Chrysler debacle, even if – as with Britain’s – it will increasingly be owned by foreigners.

And if the GM deal does not happen? Then my money is on Cerberus selling Chrysler to a foreign maker, very likely from a ‘developing’ economy. Just like Rover.

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By Gavin Green

Contributor-in-chief, former editor, anti-weight campaigner, voice of experience