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.
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