Could Magna buy Chrysler and put Bernhard at the helm?
Toronto, Ontario based Magna International is the third largest automotive supplier in the world with 2005 sales of $22.8 billion. They have had a long relationship with DaimlerChrylser both in North America and Europe including running an assembly plant in Graz, Austria that builds various Chrysler models for the European market. Amid the flurry of speculation in recent days about the fate of the Chrysler Group comes a new one from Just-Auto: Magna buys Chrysler and hooks up Wolfgang Bernhard to run the show in Auburn Hills. Although Magna is a big enough company that they may well be able to pull off such a large transaction, other suppliers are worried about the effects on them. If a company like Magna owned the carmaker would they lock out other competing suppliers like Lear, Johnson Controls, Collins and Aikman and others? Certainly, when GM owned what is now Delphi, it was a lot harder for outside suppliers to bid on contracts that Delphi also produced like brake and steering systems. The other big part of this speculation has Wolfgang Bernhard, now free of his VW obligations stepping in to run the show. This one evolves out of a previous rumor that Bernhard was going to be hired to succeed Magna founder Frank Stronach who may be ready to retire.
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Reader Comments (Page 1 of 2)
jim 10:20AM (2/22/2007)
A possible problem for the Bernhard portion of the rumor are the reports that Bernhard's separation agreement with VW includes a noncompete clause.
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All World Automotive 11:48AM (2/22/2007)
Great. Here goes a US based company to Canada. What next? Ford to China?
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Gardiner Westbound 10:34AM (2/22/2007)
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Chrysler could work under Magna ownership. Everything Stronach touches turns to gold.
With daughter Belinda amusing herself as a politician he doesn't have to worry about her throwing a spanner into the works.
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kanadian 10:49AM (2/22/2007)
I think the Stronach family is strong enogh to buy....mostly they are very smart. and for the above comment on Belinda's political life, i think she is just there to gain more power and maturity; most players underestimate her potential combined with her looks :P
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Phil 9:26AM (2/23/2007)
Finally, something else besides the near-impossible rumor of GM overtaking Chrysler. At least this one sounds legitimately possible, with both entities somehow benefitting from it...
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sunil 1:16PM (2/22/2007)
Magna always wanted to be selling cars direct but this is a bad move as they also produce parts for other manufacturers which may see them loosing those deals - they produce parts for all major brands 33% of all cars made have some parts from Magna
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moogy 11:00AM (2/22/2007)
Wow a Canadian company buying out Chrysler. The next thing we will see is Bombardier making cars for the masses.
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akintz 11:02AM (2/22/2007)
So what's going on here? Someone starts a rumor that company A is going to by Chrysler? Company A says "we're not that stupid." So a new rumor starts about company B. They too claim that it's all lies and would never do such a thing. So now we have company C. Will they too, claim they know nothing of this? How far in the alphabet do we have to go? Is someone just trying to stir up stock prices or something?
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Tim 11:14AM (2/22/2007)
Hey Sam What do you think about licensing the Jeep and Chrysler names to other auto manufacturers with an agreement that these cars stay out of NA, Europe and Japan (because of organized labor). Imagine Indian Carmakers or Chinese automakers selling Chrysler/Jeep branded cars and giving a cut to Chrysler.
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Gardiner Westbound 11:17AM (2/22/2007)
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With the Libranos out of power and no Chrysler presence in Quebec it's unlikely Bombardier will buy it. It would have to pay for it with its own money!
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david.barrett 9:18PM (2/23/2007)
OK, this actually does sound like a Stronach move and could be plausible. Even if GM were to buy Chrysler, for anti-trust reasons, they may be forces to sell off certain portions/business lines of the combined company, and I can see Magna wanting a piece of that. Not everything that Frank Stronach touches is gold, but he does have the track record in the purely automotive world to do it.
All I can say is if Berhard is married, his wife had better keep an eye on the bosses daughter!
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Sam Abuelsamid 11:35AM (2/22/2007)
Tim, I think that would be potentially suicidal for the brands. It's bad enough when brands get spread too thin with products like the Jeep Compass, Mercedes A-Class and Porsche Cayenne. Licensing to other makers could cause more trouble than it's worth.
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Tim 11:42AM (2/22/2007)
Sam I agree that it could be bad for the brands but Jeep and Chrysler really need money right now and they don't have a presence in China or India. chrysler would get approval for all projects. I have seen the A class and B class Mercedes and they are disappointing but developing countries would love it just because its a Benz. I mean a lot of these people make about 5-8,000 dollars a year. Thanks for your feedback.
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Michael Karesh 11:47AM (2/22/2007)
Certainly an interesting bit of speculation. The return of vertical integration, I certainly didn't see that coming.
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Tim 12:11PM (2/22/2007)
Hey Micheal,
A lot of companies license their name. Any Camel cigarettes outside the USA are made by a Japanese company. Kit Kat outside the US is made by Nestle. The Jeep brand could grow in India and China like a native brand since all the marketing, manufacturing, would be local. Heck some of the UAW guys could be consultants at the foreign plants. Chrysler vehicles would still be made here for the N. American and S American markets. Its about preserving iconic brands and their heritage and some jobs at the end of the day
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Jeremy 12:13PM (2/22/2007)
If such a merger would to happen, would Chrysler still use the Magnum/300/Charger/Challenger platforms from Benz? Or would there be some agreement that would allow them to continue using those platforms until the model is up for an update?
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sirAQUAMAN64 12:54PM (2/22/2007)
This actually makes the most sense out of everything I've read.
And prevents a Chinese company from stepping-in, which is something I think GM/everyone else would like to hold-off.
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Kevin 1:22PM (2/22/2007)
Tim - already happened, see Beijing Jeep, this has been going on since the 80s...
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KC 2:57PM (2/22/2007)
Well, I'll be rooting for Magna.
I'd rather see Chrysler return to North American ownership. I'd rather not see them go to the Chinese.
And a merger with GM makes little to no sense and I personally think it will turn customers away from both companies and not solve either companies financial troubles.
Magna can still be Magna and sell parts to everyone, they'd just also be the parent company of Chrysler.
I hope this rumor of Magna's interest in Chrysler not only turns out to be true, but also that Magna is the successful bidder.
Wasn't Magna also one of the rumored bidders for Aston Martin? It would seem they may just be shopping around for an automaker to buy after all.
I very much hope they win because I very much like Chrysler and would love to see them restored to a profitable North American Automaker and once again have "The Big 3"
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TDIMeister 3:06PM (2/22/2007)
It's an idea that just might work... a return to vertical integration with an upside down twist. A supplier buying an OEM, who wouldda thunk?
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