Is the Chrysler Group for sale?
DaimlerChrysler reported third quarter earnings today of $686 million in net profit, but its Chrysler Group division dragged down that profit margin by posting a loss of $1.47 billion, a figure that completely erased the gain of $1.24 billion made by Mercedes-Benz. During a presentation today, DaimlerChrysler CFO Bodo Uebber didn't rule out the possibility that the Chrysler Group could be sold off. While far from saying the division has a For Sale on its windshield, Uebber told reporters, "We don't exclude anything here... We will do our analysis. Second, we will talk about measures. And third, we will draw our conclusions." DCX predicts the Chrysler Group will finish 2006 about $1.2 billion in the red. As we reported earlier, the automaker has put together a task force comprised of executives from all its divisions to study the Chrysler Group's business plan and help the division cut an average of $1,000 from the cost of each vehicle it produces. No doubt the conclusions of this internal study will be used to make recommendations for or against keeping the Chrysler Group in the fold.
We seriously doubt that this proposition is being seriously considered by DCX. For one, the Chrysler Group has been profitable for DCX in the past and likely will be again once it nails down a decent health care deal with the UAW, pads its lineup with more small car offerings and less SUVs, and gets the Challenger out into the public's hands. There are other unprofitable brands under the DCX umbrella, like SMART for instance, that would logically be ahead of the Chrysler Group in line for sale. Still, Uebber should've known the fire storm of speculation that would start if even the prospect of selling the Chrysler Group was even mentioned in passing.
[Source: Automotive News]
Reader Comments (Page 1 of 2)
Jaimie B 2:24PM (10/25/2006)
Why MB wanted any part of deadbeat Chrysler to begin with is something that really is puzzling. Their vehicles basically have nothing in common. I think the association with Chrysler has somewhat tarnished the image of MB.
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KT 2:30PM (10/25/2006)
Sort of off topic...There was an article yesterday discussing the 50,000 cars they have stored around Detroit and Toledo. They haven't been "counting" these vehicles in their days supply calculations. This makes it look like their inventory supply is lower. It also creates a false picture of their financial standing.
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JCWhitless 2:33PM (10/25/2006)
Yes, I'm now one step closer to re-launching AMC!!
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Paul 2:33PM (10/25/2006)
this would be a good opportunity for the chinese govt to get into the us auto business. move production back to china and distribute in the usa. reduce prices 40% and dominate the american market. american consumer get a better made product at a huge discount. china gets jobs. everyone wins.
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iQuack 2:51PM (10/25/2006)
Odd to be predicting the sale of Chrysler with so many new models being introduced it this time or soon: Sebring, Avenger, Compass, Nitro, Aspen, Patriot, etc.
Would make more sense if Chrysler's latest car/SUV lines were failing--it's too early to establish that.
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johnny 2:52PM (10/25/2006)
It is 9 years and what has Mercedes done with Chrysler?
All it has done is given chrysler two old platforms in C class and E class from mid 1990s to base cars on (crossfire, 300C, charger, pacifica, and so on...)
There has been a serious lack of innovation at chrysler. You think they could make a minivan as good as the Odyssey but they cant. What shame. We have the same freakin caravan since 1995. Losers
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Mike Razpizdaev 5:35PM (10/25/2006)
#4 Good idea.
Folks, are you surpriced by this? I mean what the heck is Serbing or Interpid or Concord, they are 1--plain, 2-not even close to competing with Camry Corolla, Accord Civic---group---these poor cars are made to compete with these heavyweights, and obviously they can't. Chrysler better speed up its Challenger and redo its Durango/Aspen.
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Timmay 2:59PM (10/25/2006)
Unfortunately #4 it is not that simple. The infrastructure for build the large volume of cars must be considered. Right now they can only keep up with demand from their own market. Also who will bankroll these new plants. Also you have to consider the ports on which they will come through to get to middle Am where all their customers are. The US will also put some small tariffs on the cars. Also China can't make cars as cheaply as the Koreans yet and most of their cars must be priced higher to be profitable. Best way will to keep manufacturing in the US like the J & Koreans do to keep costs down. Chrysler would have to declare bankruptcy to get rid of Unions they but themselves on the auction block. China might be better off making niche products for US for now or buying Chrys. international operations
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Robert 3:08PM (10/25/2006)
If you saw the Chrysler Imperial concept vehicle at the recent Miami Auto Show you'd see that Daimler-Chrysler has some exciting vehicles coming! The Imperial is fabulous!
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dakota 4:23PM (10/25/2006)
The Pacifica is not based on an MB platform, it's based on the current Minivans.
'I mean what the heck is Serbing or Interpid or Concord'
Intrepid and Concord hasn't been in production since 2004....Swing and Miss there loser.
'You think they could make a minivan as good as the Odyssey but they cant'
Funny because the Odyssey still can't outsell the 'old' Caravan. Oh yea try and open those power sliding doors on the Odyssey manually, you'd think they would come up with a more clever system.
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Richard Warren 4:53PM (10/25/2006)
#2 Nothing new here, that's been Chryslers game for decades.
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Sue Esponte 3:13PM (10/25/2006)
The "merger" was a bunch of public relations garbage from the beginning. Mercedes bought Chrysler and needed to spin the deal in a way to appease shareholders.
Investor: "What do you mean a German company is buying one of the 'Big 3' US auto manufacturers?"
DCX PR: "No, ummmm....they're not buying them...its a merger...yeah, that's it, a merger of equals...that's the ticket...a merger. Don't worry, the Germans won't be controlling anything. Its a merger. We're all going to be one big happy family." [fingers crossed]
And, now that they've seen the error of their ways they might sell off the bits and pieces that aren't profitable. Did any Mercedes product benefit from Chrysler technology? Ummm...no. Chrysler? Yep...there are the SLK/Crossfire and Last gen E-Class/300 and all of its progenitor (i.e, Dodge Magnum, etc.) to name but a few. And, in addition to the chassis, there's the technology...oh, the technology.
Aside from the 300 they wasted time and money. With a hit (the 300) under its belt and the ability to utilize and spin off existing technology to further recoup development costs, you'd think Mercedes would be able to make its acquisition profitable, right?
Right. All of the good technology in the world, however, won't amount to anything if its packaged and marketed wrong, and if it doesn't appeal to market trends. Cases in point...
- Plymouth was (rightfully) killed off to save cash - there goes that bag undeveloped badge engineering product.
- The Crossfire is also badge engineering at its worst. The interior is pure last gen SLK. If you haven't sat in both - do so and try to argue that statement. The car itself was and is also too expensive for a Chrysler that has yet to prove itself in this particular market segment. It didn't and doesn't have the brute or a stand alone appeal of say the Viper to realize sales despite branding. The Viper could have been a Hyundai and people would have bought it. The Crossfire isn't a real performer. Its adequate at best in that category and, in my opinion, the design falls flat. The boattail rear is fine but the front end lacks enthusiasm and flair...and in this car most people so you coming (not going).
And then there are the bread and butter minivans. They're still selling well but they pale in quality when compared to products from Toyota and Honda. ITs only a matter of time before the Japanese take this segment. And, if you've never sat in all of them, I'd invite you to do so because, as above, there's no solid argument against this statement. Put 100K miles on a Town & Country, Sienna, and an Odyssey and see which one you'd prefer to own at that point. The T&C will be a distant 3rd.
- The PT Cruiser is a cute car but its design is getting a bit long in tooth and Chrysler is starting to suffer from the same problems that VW is having with the New Beetle: Where do you go from here with the design? And, since its not a bread and butter model this product alone can't save me so what do I do now?
- The new Sebring is a hodge podge design that doesn't know what it wants to be or who it wants to compete against. Its neither staid nor sporty. Is it a mini-300 or something else? Its also bound to fill every car rental lot on the planet, to further minimize its appeal to the public.
- The Pacifica is an interesting concept, too. Personally, I think its a great looking car for what it is. Its smart looking and has certain sporty portentions without trying to be something that its not...but the problem is that its not really much of anything! I'd love to know who on the DCX board sat down and said, "Let's create a new market. We'll call it a crossover. It will hold less cargo than an SUV, minivan or even a comparably sized wagon/estate and we'll sell the advantages of those vehicles without losing the performance benefits of a car." If that made no sense to you then you're paying attention. At least they hit their target. The Pacifica excels at nothing. SUVs do their thing better, minivans do their thing better and wagons do their thing better. It doesn't handle better than a sporty SUV and it doesn't really carry more than a big wagon. Why buy one? I'm not sure...maybe because you don't want a wagon but you like its design?
- Oh, and then they killed the one car that they need most: the Neon. They completely ignored the burgeoning small car market. And, to make that matter worse, instead of filling the void with a proper replacement, they decided that an SUV/Crossover-like Jeep Liberty based replacement might be appropriate.
Why is it that Honda, Toyota and Nissan were able to foresee the trend to smaller cars (i.e, Versa, Fit and Echo) when Chrysler saw fit to kill its little car in favor of much bigger, gas guzzling products such as the badge engineered Aspen. Isn't Ford being decimated by the dying market for SUVs?
In summary, I wouldn't be surprised if Mercedes truly wanted to sell off unprofitable bits and pieces of the Chrysler group. I would, however, be surprised to learn why anyone actually wanted them. The only brand of real stand alone value to SCX is Jeep...a brand built around a WWII vehicle that helped America defeat the Germans. No irony in that, huh?
Rant and ramble ended.
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hitbyastick 5:54PM (10/26/2006)
Jaimie B.
I think the awful quality of recent Mercedes-Benz vehicles has done the most to tarnish the image of MB. Blaming another brand is beyond stupid. MB's rep is in the shitter due to it's own crap products, period.
The 300C and Magnum have been celebrated as the best cars from Detroit in 30 years. Anybody remember these handsome, well-performing cars? I thought so.
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DC_1 3:52PM (10/25/2006)
Very well said #10
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aaron 3:47PM (10/25/2006)
ahahaha, "we seriously doubt this is seriously gonna happen but we'll report on it anyways."
Nissan Ford and GM have a better chance of forming a partnership than this happening lmao.
What 12 consecutive profitable quarters and now they are for sale after 2 crappy ones. Lord knows Mercedes Benz has not had their issues in the lat few years lol.
Chrysler left themselves wide open overproducing earlier in the year, not having mid sized cars to sell, and having so many new vehicles being launched late. Compounding this their current showdown over healthcare costs and they are in a spot.. for now.
I'm not sure if any of the velcro shoe wearing set heard that the new merecdes SUV, which at least they say shares DNA with the Grand Cherokee just won the SUV of the year award from motor trend. This type of sharing of engineering has been something that was said to be growing.
I'm not sure if any of the window lickers have heard about their plans to share parts between platforms for "cheaper by the dozen" savings of which mercedes would benefit the most.
Maybe I'm the only one who was Chrysler group is rolling out new vehicles to europe with some success.
Flushing the Chrysler group is 100% counter intuitive to where they have been moving. If they were dumb enough to do it, then so be it.. lol.
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Cap'n Jack 3:52PM (10/25/2006)
Does anyone excluding premium brands make any money in the auto business with the exception of the Japanese?
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ruggels 4:04PM (10/25/2006)
#13, the koreans do. the bigger question is does anyone BUT the american brands loose so much money domestically, and that answer is no. Last quarter VW lost $800,000,000 in the us and made $2,300,000,000 in Germany, thus the crux of the issue isn't does anyone except porsche, audi, bmw, mercedes and the japanes make money but rather why is it that the american automotive companies are the only companies loosing the bulk of their money domestically, which gets back to #10.
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el indiano 4:08PM (10/25/2006)
this loss will certain hurt MB. there quality has been lacking and has surpassed Range Rover recently. although i still consider MB a great brand, but its association with its american partners has certainly hurt its reputation in my oppinion.
honestly it doesnt appear that MB association with chrysler has help chrysler either with their 3rd quarter losses.
Chrysler does have a few vehicles that are selling well, for example, the magnum. but why still offer the Crossfire when it takes dealers between 250 - 300 days to move just 1?
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el indiano 4:33PM (10/25/2006)
personally, i would by a used honda over any new crysler.
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Pete 4:43PM (10/25/2006)
What mivivan won 2006 JD Power quality award?
Chrysler minivan.......
BTW new Chrysler vans are 8 months away
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