Nissan makes offer for 20% of Chrysler
by John Neff on Oct 22nd 2008 at 10:28AM 
The fate of Chrysler LLC continues to grow more complicated as reports today indicate that Nissan/Renault CEO Carlos Ghosn has made an offer to buy 20% of the privately owned automaker from Cerberus Capital Management, which is also currently in talks to make a deal with General Motors. Unlike a potential deal with GM that could see Chrysler's brands dismantled, a deal with Nissan, which already has an alliance with Renault, would likely keep the American automaker intact and moving forward. Chrysler would become, in effect, the American arm of a triumvirate of brands that includes Nissan from Japan and Renault from Europe. Only Nissan's name is on the offer, however, because it reportedly has the cash on hand to make a deal, while Renault has around $5 billion of debt on the books. Nissan also already has a partnership with Chrysler in which it will get a version of the Dodge Ram full-size truck to replace the Titan and in return supply Chrysler with a new small car.
A potential Chrysler/Nissan/Renault mashup makes much more sense than combining two American automakers whose products overlap and are both in bad shape right now. But sense doesn't mean much when companies are out to make money, and Cerberus may not be interested in a deal with Nissan that keeps it a player in the auto industry. The investment firm reportedly still favors a deal with GM that would essentially fill its pockets with cash and absolve it of any responsibility for the house that Walter P. built.
UPDATE: Some people have asked about what will happen to Daimler's remaining 19.9% of Chrysler LLC if Cerberus makes a deal with either GM or Nissan, and reports indicate that Chrysler is actively seeking to buy the rest of Daimler's stake before any deal is made. We're guessing the German automaker is just about ready to relinquish its rights to Chrysler and get as far as away from this cluster **** as possible.
[Source: The Detroit News]
Reader Comments (Page 1 of 4)
300Kid 10:39AM (10/22/2008)
Oh I really hope this is how it turns out. Cerberus needs to calm the hell down.
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MemphisNET 10:58AM (10/22/2008)
Agreed. Did Cerberus really think they could make a dime in less than a year, after 9years of German cost-cutting?
Chrysler needs to stay. They need a revamp to 70% of their lineup, but they still need to stay.
Tim 11:12AM (10/22/2008)
Why does Chrysler need to stay? Auto sales are down almost 30% rendering many carmakers redundant in a smaller US market that is turning away from larger cars and trucks. Chrysler can stay but not in its current bloated form.
MemphisNET 11:36AM (10/22/2008)
Chrysler is down like everyone else, but the major reason they're 'down' is because they killed off 4 vehicles, and they don't sell to fleets in major numbers. Chrysler sales in every region BUT the USofA is up up up, especially in Canada and Mexico.
The other reason they need to stay is simple. Hundreds of thousands of jobs, directly and indirectly. Think the economy is crippled now?
Tim 11:46AM (10/22/2008)
"Chrysler is down like everyone else, but the major reason they're 'down' is because they killed off 4 vehicles, and they don't sell to fleets in major numbers."
They killed off model lines because they were not selling and fleet sales were a money loser.
"Chrysler sales in every region BUT the USofA is up up up, especially in Canada and Mexico."
Won't make up for US declines.
"The other reason they need to stay is simple. Hundreds of thousands of jobs, directly and indirectly. Think the economy is crippled now?"
Fine but why executive pay and lavish labor contracts shouldn't be taxpayer liabilities. Cut pay renegotiate the labor contracts close dealers then America will get behind a bailout 100%.
Judy Zik 12:05PM (10/22/2008)
This is the right type of merger for all the right reasons. Nissan and Renault already have their hands in Chrysler and a CEO who is known for amazing turn arounds. Chrysler has been suffering from a lack of leadership. Nissan gets ownership of the Truck platform they wanted. Renault gets a North American dealership pool that in some cases has some experience selling and servicing their products. More importantly Chrysler gets access to some far more competitive platforms for it's existing products and some ready for sale small cars.
Personally my biggest problem with Nissan cars has been that most of them look ugly and boring and I hate that god awful inkjet wood trim. I like to think Chrysler's stylists might be able to come up with some pretty cool looking cars on the same platforms using some of the cash Chrysler has on hand.
If this merger went through Chrysler might go from my bottom pick to survive of the Detroit three to the top.
refugee7 6:21PM (10/22/2008)
I'm starting to think making the company burn would be better if the taxpapers don't pay for any benefits. This way it forces UAW and other unions to take responsibility for driving Chrysler into the ground. This might prevent complacency in the workforce in the future.
Not many solutions for the management though. This may be the stupidest thing I've ever conceived of but how about making stock options the only payment for management if the company is unprofitable?
CBR 12:02PM (10/24/2008)
@Judy Zik
Are you actually insinuating that Chrysler designers could HELP Nissan? Wow that's rich!
hatchbacks are cool 10:42AM (10/22/2008)
Thats the way it should be .
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alan 10:43AM (10/22/2008)
This is a much better idea than Chrysler/GM stupidity. We need Chrysler!
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BigMcLargeHuge 10:44AM (10/22/2008)
I like this split better:
Renault takes Dodge and markets Dogde trucks alongside Nissans and Nissan cars alongside Dodges. (I believe that is language of the current trade they had planned)
GM takes Jeep and sells off-roaders alongside Hummer.
GM takes Chrysler and sells alongside Pontiac (G8, Charger, Challenger on common platform?)
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Brent 3:40PM (10/22/2008)
Wow. you are stupid.
BigMcLargeHuge 4:13PM (10/22/2008)
Yeah, that didn't really come out anything close to how I intended.
I think 'Ram Trucks' could be sold as a brand. Kinda like 'Viper' is being sold off.
'Dodge' is a name necessary for keeping with the cars with history behind them: Challenger/Charger.
Even if Cerberus dumps the whole brand, I'd like to see something where at the very least the Ram and Challenger survive.
ryan 10:54AM (10/22/2008)
Chrysler Clio? Or a Dodge Megane?
If GM is making Saturn the US Opel, why not make Chrysler, or at least one division of Chrysler, the US Renault?
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Tim 11:11AM (10/22/2008)
Renault could easily sell its cars as re badged Nissans if they wanted to sell cars in the US. They share some of the same platforms anyways.
BigMcLargeHuge 10:49AM (10/22/2008)
To clarify:
What I mean is I like this split better than GM grabbing up the whole thing and killing more models.
And obviously Chrysler 300C replacement, not Charger/Challenger on GM replacement.
If Cerberus wants to unload.
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TJ 10:51AM (10/22/2008)
Is the 20% offer going to Cerberus or to Daimler?
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Alex 10:56AM (10/22/2008)
IMO:
GM buys all of Chrysler. Axes Chrysler, sells Dodge to Nissan, sells Jeep to Mihandra. All GM wants is the newer facilities.
Nissan wants to be in the truck game and Dodge's trucks and infrastructure are a quick in.
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Tim 11:11AM (10/22/2008)
What newer facilities are you referring to? The Mexican factories?
What infrastructure does Nissan want from Dodge?
chrisdavis 11:20AM (10/22/2008)
I didn't think about it at the time, but that strategy is a great reason for Cerberus to stop their badge engineering ways. It de-tangles the brands from one another so they can be split up and sold piecemeal to several other companies. That way it is clear that if you buy Chrysler, you get the minivan, but not the Aspen and if you buy Dodge you get the Durango, but not the minivan, and so on for the Caliber/Patriot/Compass, Sebring/Avenger, etc.