Struggling Chrysler takes Ch. 11 route

DETROIT — After months of struggling to stay alive on government loans, Chrysler finally succumbed to bankruptcy Thursday, pinning its future on a top-to-bottom reorganization and plans to build cleaner cars through an alliance with Italian automaker Fiat.

The nation's third-largest car manufacturer filed for Chapter 11 bankruptcy protection in New York, with ambitions to emerge in as little as 30 days as a leaner, more nimble company, probably with Fiat as the majority owner. In return, the federal government agreed to give Chrysler up to $8 billion in additional aid and to back its warranties.

"It's a partnership that will give Chrysler a chance not only to survive, but to thrive in a global auto industry," President Barack Obama said from the White House.

Utah auto dealers will likely feel little impact due to the restructuring, according to John Garff, chief executive officer of the Ken Garff Automotive Group in Salt Lake City. He told the Deseret News on Thursday that the Chapter 11 reorganization would be good for the medium to long-term viability of the automaker.

He said that most of the 3,200 dealerships nationwide will be able to weather the storm of the bankruptcy, though some will not survive. Metro areas with higher densities of dealerships, such as those on the East Coast, will see some of their Chrysler stores close, he said.

However, metro areas like the Wasatch Front, which has only four dealerships, will not be as adversely affected, he said. For the most part, customers will notice little difference in their car-buying experience.

"The warranties are safe, guaranteed by the federal government," Garff said.

Jim Hinckley, owner of Hinckley Dodge Chrysler Jeep in Salt Lake City, expressed similar sentiments. He told the Deseret News that the carmaker was able to overcome similar problems in the early 1980s when Chrysler received government-guaranteed loans to keep the company afloat.

"With the current financial conditions, it's going to be a little tougher and it's going to take a little longer," he said. "My feeling is Chrysler could wind up being the No. 2 manufacturer in the U.S."

He said that with the reorganization and introduction of several new car models in the next 18 months, the company "could be profitable by the end of the year."

Chrysler said that starting Monday, it will close all its plants until it comes out of bankruptcy. At least three Detroit-area factories sent workers home Thursday after suppliers stopped shipping parts over fears they would not be paid.