Chrysler Unlikely to Survive As-Is, Analyst Says

(MoneyWatch)  NEW YORK -- Despite the guardedly optimistic business plan Chrysler submitted to the U.S. Treasury Department this week, Chrysler as it exists today is likely to be out of business within a year, said Craig Cather, president and CEO of CSM Worldwide.

"We don't see Chrysler operating in its present form a year from now. We expect it to be split up or spun out so that certain parts of the organization will be operating a year from now," Cather said at a meeting today of the International Motor Press Association. CSM is a global consulting, forecasting and analysis firm based in Northville, Mich.

Another possible outcome for Chrysler ?€" even with government financing ?€" could be a "controlled wind-down" and Chapter 11 bankruptcy protection, Cather said.

In December, Chrysler asked for a total of $7 billion in government loans, to avoid running out of cash to pay its bills. It received a first installment of $4 billion on Jan. 2. On Feb. 17, Chrysler asked for an additional $2 billion on top of the pending $3 billion from its original request.

The Feb. 17 request was part of a business plan required by the Treasury Department, to justify the money already received, and to support Chrysler's request for additional money. Treasury is to decide on Chrysler's request by March 31. As part of the submission, Treasury also asked Chrysler to prepare a scenario that included Chapter 11 and an "orderly wind-down."

In a Feb. 17 conference call, Chrysler President and Vice Chairman Jim Press said the company prepared the bankruptcy scenario only because it was required, not because the company thinks it's necessary. Press maintained that if Chrysler can continue to get government finding, Chrysler can survive on its own, even without its proposed alliance with Fiat.

Cather said potential benefits from the Fiat relationship will be too slow in arriving. "The issue with Fiat is it doesn't do anything for them (Chrysler) in the short term. Fiat does not bring any cash to the table, and there are a lot of questions how this alliance would work," he said.