Is Chrysler beginning to operate under the assumption that it will not remain independent (or solvent)?

This is a bit of a companion to my previous post.

From the Los Angeles Times, found at Polizeros:

“The troubled automaker said Tuesday that it would discontinue production of its Dodge Durango and Chrysler Aspen hybrid sport utility vehicles at year-end, when the company shuts down the Delaware plant that makes the two trucks. Chrysler is closing the plant because sales of the non-hybrid versions of the SUVs have been selling poorly. Through September, the company has sold 35,020 of the vehicles, a 40% drop from the 57,979 it sold a year ago.

The move will leave Chrysler without an alternative powertrain model for at least a year and probably longer.

…

The irony of the plant closure is that the long-awaited hybrids, Chrysler’s first foray into alternative powertrains, haven’t even hit dealership lots. After months of promotions and promises, they simply are nowhere to be found.”

I can understand that just about any cutback on Chrysler’s point of view could be justified in their circumstance, in this automotive and economic climate, but this suggests to me more than just cost cutting.

Shutting down the plant that makes the Dodge Durango and Chrysler Aspen (the what?  Never even heard of that one) would seem logical, but that the Chrysler organization will not have a hybrid model in their lineup for more than a year shows that the company is conceding any short-term hope.  Although the LA Times indicates even hybrid SUV sales have suffered this past year, they have weathered the consumer crunch far better than their conventionally-powered counterparts (drops of 11.5% for hybrid SUVs vs. 20.6% for conventional light trucks and SUVs).

The point that shocks me is that the company has already received 3,000 orders for these high-priced hybrid SUVs.  At (my estimate) $45,000 a piece (which seems likely or maybe low considering likely discounts/promotions and that the base MSRP is reportedly higher than that already) we are looking at Chrysler foregoing $135,000,000 of immediate sales with this decision and who knows how many others down the road.  And I would guess that most customers that put a down payment for either of the two vehicles will not be selecting another Chrysler, considering the lack of similar vehicles in thier lineup and the continued economic turmoil that would give anyone reason to hesitate in completing a $45,000 transaction, especially when given an opportunity to walk away.

Alone, this move could definitely be interpreted as simple cost-cutting (it certainly would make the most sense to cut SUV factories… but their only hybrid SUVs?) or perhaps there are circumstantial reasons I am not aware of that make this decision more appealing, but this could become very interesting should future cost-cutting measures taken by Chrysler show a similar disregard for the less-devastated market segments.

Sidenote:

“Chrysler charges a significant premium for the hybrid versions of the mid-size SUV models. The Durango, with a base price of $45,340, comes at a 59% premium over the non-hybrid Durango, while the Aspen hybrid, at $45,570, is 30% more expensive than the traditional drivetrain Aspen.

That’s a considerably higher hybrid premium than found elsewhere in the market, a cost that is partially explained by the fact that, lacking its own hybrid technology, Chrysler buys it from General Motors Corp.

Toyota’s Highlander hybrid, for example, costs $34,700, 25% above what a non-hybrid version costs. And although the Ford Escape hybrid carries a 45% premium above the non-hybrid version, at $29,305 it’s still $16,000 cheaper than the Durango.”

Okay, agreed:  The Durango’s hyrbidization is a costly option for consumers, but why compare it with the Ford Escape?  And why compare the two vehicles with the dollar value difference?  They are entirely different vehicles.  The Ford Escape is a cute or a mini-SUV.  The Durango is a full-size.  Why should it be relevant that the 5-seat Ford Escape Hybrid is $16,000 cheaper than the mythical 7-seat Dodge Durango?  It’s 2/3 the size of the Durango, of course it’s cheaper!

That comparison could be very misleading for someone not familiar with the Durango or Escape.  It really bothered me and I felt I had to bitch aobut it.

(For anyone who cares, here is an auto123.com comparison of the conventional Durango, Escape, and the Hybrid Highlander.  The prices are Canadian — yes, that’s what we pay for cars in Canada, and yes, our warranties suck compared to yours — but the dimensions should be the same as the American counterparts except they are logical, as in metric. The Ford Escape’s price cannot fairly be compared to the Durango’s.)

… and the cow goes moo