Chrysler: Bankruptcy Not So Bad

On Thursday, the day Chrysler filed for Chapter 11 bankruptcy protection, it had a pretty good auto-sales day, and the trend continued into Friday, the company said.
Author:
Publish date:

For years, the conventional wisdom has been that a bankruptcy in the auto industry would make it nearly impossible to sell cars. But

Chrysler

is not so sure about that.

"I don't think the issues that have been thought about have come true, because it's not a liquidation," Chrysler President Jim Press said Friday on a sales conference call. "Customers make the decision to buy on quality, appeal, the dealership ... a lot of those factors drive a lot more of the decision process than what you may consider the news and headlines might be.

"The president of the United States has said the U.S. government will back our warranties," Press noted. "The viability issue is enhanced from the cloud over us for the last month." Among the benefits of the deal to seek Chapter 11 bankruptcy protection was the designation of GMAC as Chrysler's preferred lender, he said.

But Press also acknowledged, "It's uncharted waters -- We're going into this thing learning every day."

On Thursday, the day Chrysler filed for Chapter 11 bankruptcy protection, it had a pretty good auto-sales day, and the trend continued into Friday, said Steve Landry, executive vice president for sales, on a sales conference call.

Sales totaled about 11,400 on Friday, Landry said, and about 500 by mid-Friday afternoon. Both numbers are typical for the first and last days of the month. "The last day of every month is typically 18% to 20% of the monthly business, so (Thursday) is very typical," Landry said. "Today we have 500 sales, also very typical of the first day. ... It seems to be in line."

Also Friday, Chrysler said its sales fell 48% in April, as it sold 76,682 vehicles. But Press said retail sales fell 39%, in line with an industry retail sales decline of 37%.(Overall industry sales fell 34%.)

"We held our ground in the retail markets," Press said. "We are able to continue to function and do well during these times of a lot of troubling headlines."

Chrysler's April fleet sales fell 66%, as the company continued its effort to reduce less profitable fleet sales.

In stock trading on the first day of Chrysler's bankruptcy, shares of

General Motors

(GM) - Get Report

fell 6% to $1.81.

GM, which reported sales fell 34% in April

, has until June 1 to make a deal with stakeholders or go into bankruptcy as well. Meanwhile, shares in

Ford

(F) - Get Report

,

which saw sales drop 32% in April

, declined 5% to $5.69 a share.