Reports say Cerberus chosen as Chrysler buyer
It was only hours ago we reported that Cerberus looked more likely than Magna to buy Chrysler. Now The Detroit News is reporting the firm may have already been chosen as the preferred buyer and an announcement could come as early as Monday. Reuters and The Wall Street Journal say negotiations are still ongoing.
The WSJ says the deal would set up an entirely new company to take responsibility of Chrysler's massive pension and health care liabilities. The paper also says Cerberus would also make a "substantial payment" to Daimler. WSJ also says former Chrysler chief operating officer and Cerberus adviser Wolfgang Bernhard would not return to Chrysler in an executive position, but could have a board seat. Also, Daimler may keep a minority stake in Chrysler.
Whether or not Chrysler going to a private equity firm is a good thing makes for seriously interesting discussion fodder. Automotive News (subscription required) points out that breaking Chrysler free of its health care and pension baggage could make for a much more lithe car company capable of achieving great things. But the UAW is already upset with Cerberus possibly pulling out of a deal to help Delphi out of bankruptcy. Which means the union workers are not exactly gonna be celebrating a Cerberus buy.
Bloomberg's story has David Cole, chairman of the Center for Automotive Research, saying a private equity buyer would be "the worst nightmare" for the UAW.
So, what do AB readers think? Can cost cutters cure Chrysler? Or might management by Magna have mattered more? Tune in tomorrow for the next exciting installment.
[Sources: Automotive News, The Detroit News, The Wall Street Journal, Bloomberg, Reuters]
Reader Comments (Page 1 of 1)
Don 11:48PM (5/13/2007)
They'll bust the unions, cut the majority of R&D and the Workforce, ditch the pensions and health care, and sell it to Chery, probably in a less than 5 year time frame.
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Petey 11:44PM (5/13/2007)
The top priority for these guys is return on investment... bringing Chrysler back from the grave has the highest risk and possible lowest return.
Chrysler will be chopped up and sold to the highest bidders.. most likely the Chinese.
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cgarison 12:03AM (5/14/2007)
I guess that I am not going to get a RED Chrysler.
(giggle)
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Gon(Jon) Jorge(George) 12:05AM (5/14/2007)
If UAW sticks around.....maybe they should follow UAW rules like these, at these places...
at NUMMI, Mitsu plant in Normal, IL, and at the 2 engine plants in Dundee, MI, for GEMA(Hyundai, Mitsu, Chrysler).
Yes, they had issues, but they usually get settled( Mitsu did, iirc, and Toyota/GM)without threats of strikes, etc.
Also, STYLING.... No matter hwo gets Chrysler, they had better learn when people buy CARS, they don't want a Sebring, when shown(in 03, as rwd though?) a conpcet like the Airflight. Went from a design that would have got Chrysler more sales than they could handle, to having ot sell to fleet rentals( around 50% of Chrylser IS fleet rentals).
Sub-compact, or compact car? Where is it? Compacts are outselling SUV's! They repalced the Neon with the Caliber( yeah, this makes sense, on crazy world).
Whatever they got coming from the Chery deal, it had betterbe good, and not cheap interiors, and cars with truck looking grilles, and other idiocy that's killing this company.
Thought I read Chrysler wants hybirds available, by 2010, on all cars? Why not diesels, instead?
The new one's are superb.
RWD... sells, but if they want ot sell more cars in my area, try FWD, too.
The 300, in my Midwestern town,(due to snow, ice, etc) does not sell hardly at all.
Why not build a FWD car, and nto the Sebring/Avenger let downs, similar to 300( read the original idea was to make a mini-300 FWD.... that might have been cool, and prior to this, they showed the Airflight). Also, news of dumping the PT Cruiser next year, or early 09 for another suv/cuv thing? C'Mon!
Are you daft, Chrysler?
The PT has sold OVER 100,000+ units every year since introduction!
It has OUTSOLD the Caliber the past 14 months,month after month!
Check out sales when they come out for May... on June 1!
See if I'm lying.
They showed a Very Well Received PT Coupe at the autoshows for a few years, and people went crazy over it! Where is it? Chrysler said "we ran out of ideas for the PT?" Or you did not care or try hard enough, like Ford did with the Taurus?
roll-eyes.
Here's hoping the new bosses Take Charge(in all depts)and helps these fools start designing good looking cars, liek the 300, but for all sizes,(like their fwd cars, comapct, mid-sized, whatever).
If they dump the PT, I suggest making the TINY Hornet( 151 inches long? C'Mon, that - death trap on American highways. An Accent would smash it to bits in an accident, lol!)at least make it on par of the New Scion xB( about 2-3 inches shorter than the PT Cruiser).
That, well, would barely be large enough for me not to be totally terrified in traffic on the expressways.
Here's Hoping this works!
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zach 12:03AM (5/14/2007)
Looking at this reasonably (assuming it is, indeed true), it seems to me that there are really only two likely outcomes here:
1. They slash and burn and sell to the highest bidder - the "Chinese" scenario.
2. Major restructuring works, profits and products both improve, and the company is spun off into an individual entity once again.
Either way, good luck to them... and I hope they have the sense to realize that its all about the product.
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HotRodzNKustoms 12:15AM (5/14/2007)
There is a possibility Cerberus might gut Chrysler. I think Magna is the better buyer since we are looking at morals in this sale. a healthy Chrysler, Jeep, Dodge means a healthy Magna.
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????? 12:34AM (5/14/2007)
Chery will buy Chrysler, in a year, after this company "takes care" of the UAW, reitrees, etc.. and then that Hornet, etc, Chery is supposed to build for Chrysler? Well, it'll be a Chery!
Chrysler is toast. They have been since the 80's.
Theh have a minivan hit in the 80's for a few years, then tank some more. They have a new hit with PT Cruiser in 2000, for a few years, then tank somemore, then the 300 a few years ago, then bring us Ugly Personified Caliber(they even advertised it as being ugly, basically)and tank some more.
At this point, I'd welcome Chery, to be honest. It'll happen sooner or later, anyway.Chrysler and chery started working together recently, so, why not?
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PeakVT 12:47AM (5/14/2007)
Cerberus (named after the three-headed dog that garded the entrance to Hades) will probably strip and sell - that's the goal of all private equity firms. D probably sees this as the best result - get some cash, get rid of the 'legacy costs', and have a potential competitor knocked down a notch in the status rankings, or totally broken up. Selling C to Magna might create a real competitor, something D doesn't need or want. As a manufacturer, Magna might actually try to create a rational product lineup with everything from A-cars to E-cars, move Chrysler upscale to differentiate it from Dodge, and so on.
If I was a C employee I'd start looking for a job the day a deal with Cerberus was announced.
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Graham 12:55AM (5/14/2007)
This is Rover Redux. The worthy brands will be sold (Jeep) and the rest will be run into the ground, and then the tooling for the now horribly out of date models sold to China. All gone by 2017.
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zach 1:14AM (5/14/2007)
when i wrote "looking at this reasonably" in my earlier post; i clearly forgot that many people here are incapable of coherent thought. ooops.
like i said previously... this could be very, very good or very, very bad. i guess we'll see.
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Cody Peterson 2:42AM (5/14/2007)
Whats killing American Automakers to begin with is unions. Unions are obsolete. Back in the day before the government had laws to protect workers, unions made sense, but now they are nothing but greedy money grabs where they promise the little guy that he is going to be all high and mighty when it turns out that the little guy just gets royally screwed over by some union bosses / delegates who get a fatty paycheck for doing jack-diddly-squat
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midmichris 4:52AM (5/14/2007)
I'm amused. The purchase of Chrysler by a private investment firm has been, according to the unions, the worst case scenario . . . likely due to the fact that such firms are more concerned with profit (i.e. performance) than coddling the workers. UAW: Hello, this is reality, performance matters and if you can't deliver, so long. We'll see what Gettlefinger thinks about that . . . particularly after his harangue about not giving up an inch in the upcoming contract negotiations.
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Rolf B 4:56AM (5/14/2007)
Well let's see here, an Investment Co. buys Chrysler. The first thought is to go after the guys that built the cars for years and take pensions away dump healthcare perks and screw the people that didn't make poor marketing and product choices. Chrysler, as with other auto companies, can't seem to get ahold of the idea that nice/fun cars sell. Perhaps companies like Toyota have lowered the bar so far by offering ugly bland "utility" cars with no feel or soul that we see it as quality. Remember Chrysler gave us the Mini Van, Carol Shelby's return to the auto business, the return of the convertible, Viper, Prowler, Neon, PT, 300's M & C, SRT's, etc. So some ideas didn't work. Some cars made didn't touch greatness. But the puplic wants to gauge everything against an apliance like a Corolla or Camry. Maybe we get what we deserve, richer investers and poorer workers.
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Thomas Perry 5:39AM (5/14/2007)
This sure has was a disappointing morning....
My hope is that they drop many of their car lines and move to an ultra-efficient car line. Something along the lines of only selling hybrids and smaller cars with a Chevy Volt type drivetrain for trucks that would place them in a position to compete with Toyota.
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Stéphane Dumas 7:53AM (5/14/2007)
#1 the Chineses car companies aren't the only one who might eye Chrysler if Cerberus decide to sold Chrysler. Indians companies like Tata, Mahindra might keep an eye on the situation as well. Then we didn't mentionned others car makers (Fiat, VW, Peugeot, GM, Renault-Nissan, Honda, BMW). Carlos Ghosn mentionned he isn't interested to Chrysler currently but it could change his minds if Cerberus decide to sale it for a interesting price.
I spotted a interesting comment posted by chrizbenz on GMInsidenews http://www.gminsidenews.com/forums/showpost.php?p=1045129&postcount=18 then I decided to quote
"Seeing that GM was considering working and/or buying Chrysler, and that Cerberus owes GMAC I wonder if Cerberus is going to make GM work with Chrysler. Since they plans to hold on to Chrysler of over 5 year, this could be a good plan. Maybe Cerberus could holding bank behind GM Chrysler and maybe get Daimler in the mix too,froming a conglomerate that could take on the Keiretsu that help the Japanese auto makers."
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Gale 10:43AM (5/14/2007)
None of the potential suitors: Fiat, VW, Peugeot, GM, Renault-Nissan, Honda, BMW, Chery...
will move a finger until the UAW is completely 100% out of the picture. That means retirement plans, healthcare liability, everything. Only then will any of Chrysler have a remote chance of turning a profit.
The UAW has killed the US Auto industry the same way the Steelworkers killed their industry. The steelworkers can be forgiven only because it's a union's job to be self-centered and greedy. But having seen what happened it's inexcusable for the UAW to step in and do exactly the same thing 25 years later.
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DC Echo driver 2:01PM (5/14/2007)
I'd like to see one of the Big Three drop everything and focus on small, clean, efficient cars. It might as well be Chrysler. I just got a Toyota Echo for my commute here in DC, and I love the value. It's only got 21k miles on it, so I might be driving it in 2015.
Btw, for those who blog, there's a service at http://www.thenewsroom.com that lets you copy code and embed videos in your blog and play it there. They have a CBS news video on the Chrysler sale right now.
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azzo45 2:44PM (5/14/2007)
Everyone seems to be linking pensions & healthcare with the UAW... I worked for Chrysler for 10 years & my Dad worked there for 30+. We were not UAW members & Cerberus will just be the pimp for the Chinese as they scr*w tens of thousands of retirees & former workers out of what they EARNED.
The pi$$ poor executives & high end managers will get their golden passes... rewarded for the crappy job they performed. Cerberus is run by an ex Bush 43 SOB & that will mean Congress wil greenlight anything low & dirty this private firm does.
Any American who buys rebadged Chrysler product after the potential fleecing of its retirees has blood on their hands. But in the end some people just want a deal
"I'd like to see one of the Big Three drop everything and focus on small, clean, efficient cars. It might as well be Chrysler." -DC Echo driver
Toyota didn't get "green" overnight... neither did Honda. Toyota has a rumored 44 BILLION in cash reserve, Chrysler just got dumped by Daimler, with resourses to develop small engine tech (along with clean diesel tech). Do you seriously thing that "green" technology is just gonna appear like magic?? Get REAL.
DaimlerBenz & the Chrysler Group made lots of $$$ selling gas gussling Ram trucks & V12 Mercedes autos.... not everyone can drive a Prius or an Echo as their primary transportation!!!
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Yuji 9:04PM (5/23/2007)
Yes, all the union workers and pension beneficiaries destroyed the American automobile industry. None of the eight figure +/year salaried management had anything to do with modern woes. I wish people would stop buying into propaganda lodged by robber barons and hedge funds looking to fleece company treasuries.
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