By Chris Haak

08.27.2008

Chrysler LLC announced today that it is “considering strategic alternatives” for its Dodge Viper sports car sub-brand. According to the company, several third parties have approached the company to inquire about the possibility of buying just the Dodge Viper (but, of course, not the rest of its Dodge brand) and continuing the car’s development into future models.

Because Chrysler decided to announce the review – and has retained investment banking firm Lazard as a financial advisor for the analysis – it’s obvious that this idea is more than just a passing fancy in Auburn Hills. Although many observers feared that Cerberus would “strip and flip” Chrysler after buying it last year, splitting the company into pieces and breaking it apart piece by piece, I wouldn’t put too much stock into the idea that this is an indication of that kind of strategy. Instead, the Viper faithful should actually see this as a good thing, as the car’s continued existence was (and still very much could be) in jeopardy.

The Viper is basically hand-assembled at the Conner Avenue Assembly Plant in Detroit; no other vehicles are built there except for the Viper.  The cost of engineering a car that has sold just 682 units through July 31 (and only 435 during all of 2007 because of a model changeover), not to mention requirements of having suppliers source components for such a small volume, and just keeping its assembly plant open are surely prohibitive for financially-struggling Chrysler.  In contrast to the Viper’s sales figures, GM sold 16,824 Corvettes through July 31 and 33,685 in 2007.  The Viper is just a car that Chrysler can’t afford to feed at this point.  Not only that, but the 425-horsepower Challenger SRT8 – a new vehicle for 2008 – can capably serve as the Dodge brand’s performance flagship, albeit with significantly reduced capabilities relative to the 600 horsepower two-seat Viper (although the Challenger is also half the price).

Chrysler LLC CEO Bob Nardelli indicated that the company would look out for the best interests of employees, suppliers, dealers, and Viper enthusiasts as his company undertakes this review (and likely spinoff) of the Dodge Viper.  He said, “Viper is an integral part of this Company’s heritage. While this is a strategic review, our intent would be to offer strong operational and financial support during any potential transaction, in order to ensure a future for the Viper business and perpetuate the legacy of this great vehicle.”

The Viper has been in production since 1992.  Perhaps under different ownership, the car can flourish, as Jaguar, Aston Martin, and Land Rover all seem to be moving toward an era of improved products and adequate investment following their spinoff from Ford.  The alternative is to shut down the Viper brand completely, which certainly wouldn’t make any money for Chrysler.

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