Chrysler Will Be Sold, But To Which Bidder?

By Brendan Moore

10.15.2008

Chrysler LLC and its owner Cerberus were in discussions just recently with GM about selling Chrysler to the General, and although those discussions will pick up again when the current market turmoil subsides a bit, a sale to GM is by no means a done deal. First, the GM board is cool to the idea, and second, its not as if Chrysler is talking to only GM.

Renault-Nissan is there wooing Chrysler as well. The chatter in the industry is that Nissan Executive Vice President Carlos Tavares very much wants to do the deal, and the other Carlos, that is, Carlos Ghosn, the head of both Renault and Nissan, is not as keen on the romance. Ghosn is still carrying a torch for a relationship with GM, which he approached in 2006 about a merger.

Fiat Group is quite interested in Chrysler LLC, for various reasons, foremost among them access to the product not currently represented in their lineup, and, most importantly, access to the North American market again, with a ready-made dealer network. Fiat has had a number of talks with Cerberus so far.

Tata, the huge Indian conglomerate and owner of Tata Motors, Jaguar and Land Rover, is also interested in Chrysler for the same reasons as Fiat, but even more so. Tata has only the very bottom end of the market (Nano and Indica, etc.) and the top end (inhabited by Jaguar and Land Rover) and nothing in-between. Tata not only gets a U.S. presence immediately if they buy Chrysler, they also fill up that yawning product chasm. Tata could pick up Chrysler for a price that would be much faster and be far, far, cheaper than building out their product line and distribution network themselves.

And, of course, there are the ubiquitous Chinese car companies that are always interested in an easier pathway into the American market. Add to the Chinese suitors a Russian company (or two) this time around. As an example, the Russian automaker GAZ already uses a last-generation Sebring platform for one of its large sedans, and has reportedly been quite happy with it.

Cerberus is going to sell Chrysler LLC as soon as they can; they have no emotional connection to the car business, and ownership of Chrysler of Chrysler has been an unmitigated disaster for them so far. With market conditions poised to get worse, not better, Cerberus wants out. They will probably retain a small stake in the business (after all, they got Chrysler for nothing, so why not?) as part of the sale, but believe me, they want to wave a fond farewell to the “New” Chrysler as soon as possible.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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