If Chrysler Is Sold Off In Pieces

Foreign buyers may be the future owners of Chrysler’s brands

By Brendan Moore

11.09.2008

Unless some bailout for the Detroit Three can be fashioned out of whole cloth soon, it looks like Chrysler may be sold piecemeal. Cerberus, the owner of Chrysler LLC, would much prefer to sell Chrysler whole, but with GM bowing out as a possible buyer because they can’t get federal aid to fund the deal, that doesn’t look very likely at this point.

And Cerberus wants to wake up from the bad dream that has been Chrysler these last six months – they want Chrysler to go away and get back to making money on something.

How might a break-up of Chrysler and subsequent sell-off of assets shake out?

Renault-Nissan is interested in the Dodge truck line. As usual, Mahindra and Mahindra of India is also mentioned as a possible buyer as well.

A Chinese company is rumored to be interested in the minivan line, but VW might be a safer bet as a buyer.

Hyundai is interested in the crown jewel of the Chrysler family, the Jeep line, and may also be interested in some other assets (i.e., production facilities) outside of what it takes to make Jeeps.

There are no interested buyers known at this time for the car line, although it’s quite possible a buyer may raise their hand for one or two of the car models.

Although Chrysler is privately owned and therefore does not report full financials, it is believed that they will run out of money before mid-year 2009 at their current rates of sales and operating costs. Chrysler’s sales have dropped 26% in 2008, and they now have only an 11% market share in the US. Their sales numbers continue to deteriorate each successive month. Since the forecast for all auto sales in 2009 is even worse than 2008, the chances that Chrysler’s situation will improve is extremely low.

Each day that passes, therefore, increases the chance that Chrysler will pull the trigger on a sale, no matter if the sale is for all of Chrysler or a single large piece. Chrysler has taken the required steps to be able to sell their lines individually, and I cannot see them delaying the inevitable for very much longer.

COPYRIGHT Autosavant – All Rights Reserved

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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6 Comments

  1. The Dodge trucks would be a nice acquisition for Nissan. Umm, not so sure about VW buying the minivan from Chrysler. Jeep fits in at a lot of places, including Toyota, Honda, Peugeot, Renault-Nissan, Hyundai, VW, Indian and Chinese companies, Middle Eastern concerns, Russian concerns, etc.

  2. I say let them go under. A quick death is better than slowly starving to death. Chrysler cannot be saved by anybody. Even if someone bought all of Chrysler, most of the company would be thrown into the dustbin by the new owner anyway.

  3. Hyundai denied it, but they denied having any interest in Volvo recently as well, and then it turned out they nogotiated long and hard with Ford until they walked away saying the price was too high. None of these auto companies want to be seen as seeking out a purchase right now because their stock price will get punished for it. So they keep it on the QT until they can’t deny it any longer.

  4. Basically I can see how the brands Dodge and Jeep will find a new home. Both have a range and brand that has some strength and value to other car makers.

    Chrysler, as a brand, is…..how you say….rooted. Apart from the 300C (which is essentially a poor blokes Mercedes) and the Town & Country (which VW will have nada interest in past the current model) there’s bugger all thats popular OR different enough to warrant spending money on the brand and lineup.

    I’d have thought that Chrysler’s US manufacturing base might be of great interest to the emergents as a quick and dirty way of getting a US foothold….regardless of brand. Assuming, of course, that the infrastructure is sufficiently new enough to be worth anything…….

  5. For all the doom and gloom, Chrysler just needs a buyer who has a passion for autos, not just a cash cow!
    Chrysler has to great of track record to be sold off piecemeal, infact in the late ninies it made a great profit!
    If it is sold piecemeal it will have a detrimental effect on the other US Brands!
    Again if they could find a buyer and do say like Harley Davidson did in the late ninties they could be a great success!Just as much room for Chrysler as BMW,SAAB,Suburu, Kia!

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