Chrysler in Trouble

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:


Case Code : BSTR338 For delivery in electronic format: Rs. 300;
For delivery through courier (within India): Rs. 300 + Rs. 25 for Shipping & Handling Charges


Managing in Tough Times / Slowdown in Global Automobile Industry / Bankruptcy
Case Length : 21 Pages
Period : 2008-2009
Pub Date : 2009
Teaching Note : Not Available
Organization : Chrysler Motors LLC
Industry : Automobiles
Countries : US


The case details the events that led to the financial crisis at Chrysler Motors LLC (Chrysler), the third largest automaker in the US. Chrysler's inability to launch vehicles in accordance with customers' requirements and poor business strategy resulted in declining auto sales. Moreover, the global financial crisis in 2008 worsened the situation further; Chrysler found it increasingly difficult to continue its operations. To overcome its problems, Chrysler approached the US government for a loan. The company received a federal loan of US$ 4 billion in January 2009 out of the requested amount of US$ 7 billion. In order to get additional federal loan, Chrysler was asked to establish an alliance with Fiat SpA (Fiat) on or before April 30, 2009, restructure its debt and negotiate with UAW (United Auto Workers) and CAW (Canadian Auto Workers) to reduce costs.

Chrysler was able to reach an agreement with Fiat and was able to convince UAW and CAW to reduce costs. However, it failed to get all its creditors to agree for debt restructuring. On April 30, 2009, Chrysler, along with its 24 wholly-owned US subsidiaries, filed for bankruptcy protection under Section 363 of Chapter 11 of the US bankruptcy code. As part of its bankruptcy filing, Chrysler announced that it would establish a global strategic alliance with Fiat. The case ends with a discussion on the future challenges for Chrysler.


Analyze the reasons for the financial problems faced by Chrysler.

Study the rationale for poor business performance of Chrysler in the recent years.

Evaluate the alliance between Chrysler and Fiat and examine its potential synergies.

Analyze the future challenges of Chrysler.


  Page No.
Chrysler Files for Bankruptcy 1
About Chrysler 2
The Failed Merger with Daimler-Benz 4
Chrysler asks for Financial Aid 6
The Bankruptcy 7
The Chrysler-Fiat Alliance 9
What Went Wrong? 10
The Challenges 11
Exhibits 14


Chrysler Motors LLC, Bankruptcy Protection, Fiat SpA, Voluntary Employees' Benefit Association, US Treasury Department, Federal Loan, Restructuring Plan for Long Term Viability, United Auto Workers, Canadian Auto Workers, Debt Restructuring, Bob Nardelli, Global Financial Crisis, Business Strategy, Lack of Innovation, Lee Iacocca, DaimlerChrysler Merger, Merger of Equals, Restructuring Plan, Fiat-Chrysler Alliance, Powertrain Technology, Fiat's Global Distribution Network, Strategic Partnership, Winding Up of Operations

Chrysler Files for Bankruptcy - Next Page>>


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