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Discussion Starter · #1 ·
http://www.wzzm13.com/news/news_article.aspx?storyid=70695

By JUSTIN HYDE FREE PRESS BUSINESS WRITER

Created: 2/14/2007 1:04:38 PM
Updated: 2/14/2007 1:05:20 PM


The list of possible suitors who might be interested in shearing Chrysler Group from DaimlerChrysler AG is quite long - but begins with “no one.”

The statement today from DaimlerChrysler that it was considering all options for Chrysler ignited speculation about what kind of investors might be interested. But analysts have long held mixed views about whether Chrysler could survive after nearly 10 years of Daimler oversight.

That's because a standalone Chrysler would face the exact kind of problems that its managers dealt with for decades prior to the 1998 merger: a lack of scale to lower costs, fewer engineering resources than its major competitors and periodic cash crunches like the one that nearly threw it into bankruptcy in the late 1970s.

And market pressures have only grown stronger since the merger, with most automakers aiming to design and build vehicles on a global scale, such as Toyota Motor Corp. does with its Corolla.

“The problem with Chrysler is in a sense, it's only a one-trick pony,” said Joseph Phillippi, head of AutoTrends Consulting in Short Hills, N.J. “It's really just a North American car company.”

Banc of America analyst Ron Tadross disagreed, saying Chrysler's modest size - with an equity value of just $5 billion - and fairly competitive position against General Motors Corp. and Ford Motor Co. could motivate several shoppers.

“The size of the business is more consistent with that of other automakers around the world that have been turned around successfully (like Fiat and Nissan),” Tadross said in a research note.

Who might take an interest? Here's a short list:

• Renault-Nissan. Carlos Ghosn's combine has hit a rough patch in recent months, but the talks with GM last year revealed Ghosn's desire for an even larger North American base. A Chrysler tie-up would give him access to additional factories and engineers. But it would create serious competitive issues in North America between Chrysler and Nissan-Infiniti, and to a lesser extent in Europe, where Chrysler is trying to bulk up sales.

• Chinese automakers. Chrysler's deal with China's Chery Motor Co. will likely be just the beginning of joint ventures between established automakers and Chinese upstarts for vehicles outside of the Chinese market. Chinese auto companies have bought extinguished British auto brands such as MG and Rover (now Crewe), and the Chinese government has hundreds of billions of U.S. dollars that could be put to use.

While such a deal would give a Chinese owner an instant global business, it would also spawn a new level of management and political issues, such as how to balance production between Chinese and North American factories.

•Kirk Kerkorian. The 89-year-old billionaire folded his hand in GM last year, and has made a run at Chrysler before. But many analysts believe his failed attempt to spur more change at GM has soured him on the industry.

•Other European automakers. Other European automakers aren't immune to the concerns that drove Daimler to buy Chrysler back in 1998, and in the face of an ever-stronger Toyota might explore some alternatives.
Fiat SpA has turned around its auto business after several years of toil, and lacks a broad access to the U.S. market. But any such move would have to win over European shareholders who are soured on DaimlerChrysler.

•Private equity. Hedge funds have been snapping up companies left and right, and it's likely at least a couple have run some numbers on Chrysler. While a private conglomerate would bring capital and perhaps some management expertise, it would still face Chrysler's core issues, and have to haggle over investment returns with the United Auto Workers.

•Ford. Back in the late 1990s, Ford's board of directors considered a Chrysler merger for 10 minutes before dropping the idea. It's hard to imagine how Chief Executive Alan Mulally would want to add to his workload of saving Ford, but the thought may get another 10 minutes in Dearborn.
 

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Wow, I was just going to post that!:D If its really up for sale, I predict a bidding war between SAIC and Nanjing and eventually Dodge goes to Nanjing and Chrysler to SAIC, but DaimlerChrysler...sorry, Daimler has kept the Chrysler name so they have to name it Crysolar. Jeep, well they get bought off by some Japanese company, like Subaru or Toyota. The Chrysler plants will close and all production will go to China except for a small roadster that will still be made in Auburn.:cool:
 

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Discussion Starter · #4 ·
Well, since Chysler's stock market value is $5 billion, it will go for around that sum, a relative bargain.

But the real trouble is not the acquisition process itself, but what to do with UAW afterward. To turn Chrysler around, the Chinese buyer must close down Chrysler's car manufacturing operation and ship the lines back to China, leaving only truck and SUV lines in the US and Canada. This results in a job cut of 50,000 ~ 60,000.

History has proven that UAW salary could only support manufacturing of $30,000 cars in the US. To go $18,000~24,000 level, you need to attain Toyota or Hyundai-like efficiency; 100~150 cars per worker per year, that is.
 

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Chrysler - Business 101

OK, here is what will happen to Chrysler.

(China auto manufacturers, you'd be silly not to take my advice here)

Daimler Chrysler will spin off Chrysler - it will be purchased by an up and coming (my money is on Chery or FAW).

It will be "purchased" for no actual cash. Selling Chrysler is like me trying to sell the mortgage on my house - the "buyer" will be taking over a negative net worth position.

This "buyer" will then (or if they had brains they would) immediately file for bankruptcy protection. 90%+ of the reason would be to kill off the union albatross around thier neck.

40% of production moves to China. balance in US, Canada & Mexico.

Chrysler survives (they have great trucks) and China (Chery) gets a strong foothold for a song with no downside. Chrysler is dead already - they survive, they are heroes, they die & it is not unexpected.

You read it here first.

Chrisrer QQ anyone?
 

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Discussion Starter · #7 ·
Rock-N-Roll said:
OK, here is what will happen to Chrysler.
Daimler Chrysler will spin off Chrysler - it will be purchased by an up and coming (my money is on Chery or FAW).
Chery doesn't have $5 billion. Try FAW.

It will be "purchased" for no actual cash.
Sorry, Chrysler maybe troubled, but not MG Rover troubled. Needs to pay billions in cash.

This "buyer" will then (or if they had brains they would) immediately file for bankruptcy protection. 90%+ of the reason would be to kill off the union albatross around thier neck.
That kills any value remaining in Chrysler brand. You wouldn't want to buy from a bankrupt company, would you?
 

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Real_I_Hate_China said:
Chery doesn't have $5 billion. Try FAW.
No way in HELL the company is going to sell for $5 billion. Never. Ever. To anyone. Stock market & analysts will tell you the book value is this, or the liquidation value is that, anywhere from $2 to $10 billion. Book value does NOT take into consideration the RELATIVE worthlessness of the company as a whole, the lack of brandloyalty, the hatred between the company & the unions.

Real_I_Hate_China said:
Sorry, Chrysler maybe troubled, but not MG Rover troubled. Needs to pay billions in cash.
Gentleman's bet? I bet that whoever takes over the Chrysler disaster uses no real cash AT ALL to buy the company, let alone $5 billion. You'll see a stock swap, a merger, or the like. Any cash at all will be south of the $1 billion mark, and only to save face at Chrysler.


Real_I_Hate_China said:
That kills any value remaining in Chrysler brand. You wouldn't want to buy from a bankrupt company, would you?
I completely disagree. Remember Lee Iacocca? He ran some bankrupt company in the 70s if I recall.

Daimler Chrysler simply wants to unload what is dragging them down. They CANNOT seperate Chrysler & BK it, although they would if they could.

I really like dodge trucks, I like the Pacifica, I like some of what the brand has to offer. Financially speaking only, they would be best off to just make sure that someone turns off the lights before the last one leaves.
 

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The Chinese car industry won't buy Chrysler for 2 reasons:

1.) They probably couldn't afford it
2.) It would be too political

Chrysler will go to Renault/ Nissan I think. Carlos Goshn want's into America and he has made no secret of this.

The only other question might be whether Renault/ Nissan may seek a full blown merger with allof DCX. The possiblity has a lot of merit as they would have some serious global volume covering every market sector in the car industry.
 

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mgrovernut said:
The Chinese car industry won't buy Chrysler for 2 reasons:

1.) They probably couldn't afford it
2.) It would be too political

Chrysler will go to Renault/ Nissan I think. Carlos Goshn want's into America and he has made no secret of this.

The only other question might be whether Renault/ Nissan may seek a full blown merger with allof DCX. The possiblity has a lot of merit as they would have some serious global volume covering every market sector in the car industry.
I like what you say - I disagree, though, and here is why;

I think that Chrysler would spin it into a political win - The Chinese are coming regardless, better as allies than as foes. They could spin it well, politically.

I could AFFORD to buy Chrysler if I wanted to, for God's sake. They buyer will be someone who would have little to no Stateside downside (China, Nissan, VW?) and a tremendous upside (Production line, product line not currently produced)

As a side note, if a company in the US (Ford, GM) were so dumb to purchase Chrysler, buy long term puts. Lots of them.
 

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mgrovernut said:
The Chinese car industry won't buy Chrysler for 2 reasons:

1.) They probably couldn't afford it
2.) It would be too political

Chrysler will go to Renault/ Nissan I think. Carlos Goshn want's into America and he has made no secret of this.

The only other question might be whether Renault/ Nissan may seek a full blown merger with allof DCX. The possiblity has a lot of merit as they would have some serious global volume covering every market sector in the car industry.

Ghosn (Nissan/Renault)won't buy Chrysler- Their union costs too much and Nissan has enough trouble already keeping two companies afloat.:cool:
 

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just not to stray away , does this mean that DCX deal with CHERY is off ?
 

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Discussion Starter · #14 ·
cryptonx said:
just not to stray away , does this mean that DCX deal with CHERY is off ?
Here is your answer.

http://blogs.motortrend.com/6202362/car-news/scoop-why-chrysler-is-talking-to-gm/index.html

I’m going to rely on a person with knowledge to tell you what’s really going on between Chrysler and GM.

Chrysler is in talks to buy small B-cars, or designs or platforms for the same, from GM’s Daewoo Automotive Technologies. Daewoo is the South Korean affiliate in charge of designing, engineering and building small cars for GM. The Daewoo-designed and built Chevy Aveo could also become a Dodge. Dodge had trotted out a Hornet concept, pictured above, as a potential design for the car.

True, Chrysler has already signed a deal with China’s Chery for potential production of a small, B-Class world car from the Dodge or Chrysler brand, but GM’s South Korean affiliate looks more reliable and has a proven ability to supply technology to an automaker like DaimlerChrysler. Chery basically produces other companies’ designs.
 

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second part of the article

you have forgotten the second part of the article:

Ironically, GM has accused Chery of copying its Chinese-market Chevrolet Spark, which is a version of the Daewoo Matiz. So a deal could indirectly connect Chery to GM’s Daewoo via Chrysler, a case of strange bedfellows. But it won’t get as strange as a GM-Chrysler hookup.

Chairman Dieter Zetsche said at DaimlerChrysler’s February 14 annual report press conference that the automaker is “looking into further strategic options with partners beyond the business cooperation partners mentioned. In this regard, we do not exclude any option.”

Sure, Daimler would sell Chrysler for the right price. But who would buy it for the right price? You’re likely to see a GM/Daewoo-designed, Chery-built Dodge before you see a viable buyer for Chrysler.
 

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Discussion Starter · #17 ·
erik (laofan) said:
you have forgotten the second part of the article:

You’re likely to see a GM/Daewoo-designed, Chery-built Dodge before you see a viable buyer for Chrysler.
As far as I understnd, the "deal" Chrysler signed with Chery was a preliminary development deal. In other word, Chery comes out with something, and Chrysler buys it if they like what they see. Seems like Chrysler is skeptical of Chery after working with them for a couple of months now.
 

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BTW if the germans could not get this 3rd tier car manufacturer (or is it 4th?) why on earth would the chinese auto industry want to wade into the fray?
The fat. lazy slobs working in the north american auto industry are getting paid over $60 an hour to show up drunk or drugged and assemble or design a terrible product no one wants to buy.
German auto workers actually get paid more but are nearly twice as productive.

I've noticed that the auto club services that come out to do roadside repairs in NAmerica have resorted to use of toyota/honda/hino trucks to pull the defective american autos to repair stations or scrap yards.
So, japanese tow trucks haul american vehicles so they can be shredded and sent to china for recycling? What a world!
 

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Discussion Starter · #19 ·
why on earth would the chinese auto industry want to wade into the fray?
Because Chinese are 5th or 6th tier car venders that look up to Chrysler.

At least Chrysler has a brand and automotive designs of its own. Most Chinese automakers don't even have that, with the sole exception of Nanjing that has a brand, and SAIC that has Rover IPs.
 
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