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NINETY EIGHT REGENCY

General Motors is in negotiations to buy the struggling Chrysler group in its entirety, say sources in Germany and the United States.

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From Automotive News

General Motors is in negotiations to buy the struggling Chrysler group in its entirety, say sources in Germany and the United States.

High-level talks are taking place between DaimlerChrysler AG and GM executives.

Although the two companies have discussed cooperation on a large SUV, say sources at both companies, the potential deal would go beyond limited product development alliances.

Talk of an alliance was first reported last week in Germany's Manager-Magazin.

GM spokesman Tony Cervone declined to comment on the speculation, saying, "We have always said that conversations (between GM and many other parties) have happened all the time, and many times they don't come to fruition."

A Chrysler spokesperson declined to comment. Other sources have reacted skeptically.

Asked about the possible deal, Klaus Franz, GM's top union official in Europe, said acquiring Chrysler would be a "disaster" for the automaker. Franz is vice chairman of the supervisory board at GM Europe's Opel division, based in Germany.

"This is only a step to remain the number-one automaker. The problem is that Chrysler is in the same situation as GM. They don't have the right product portfolio," Franz told Automotive News Europe.

"This would be comparable to GM's alliance with Fiat. And GM lost a lot of money with that decision. I hope GM learned its lesson."

Roman Mathyssek, an analyst for Global Insight in London, also is skeptical of a purchase: "At the end of the day, if they were really to do that, that would not be a cheap option for DaimlerChrysler at the moment. It would be a lot more effective for the DaimlerChrysler group to look at how they can continue their cooperation."

Last week, uncertainty over Chrysler's future increased as DaimlerChrysler CEO Dieter Zetsche said the company was open to all options for the Chrysler group, including a sale.

"All options are on the table," Zetsche said.

Chrysler unveiled a restructuring plan as it posted a $1.4 billion (1.1 billion euro) loss for 2006. That plan calls for cutting 13,000 jobs in North America by 2009.

According to media reports, DaimlerChrysler retained JPMorgan Chase & Co. to consider options for the Chrysler group.

DaimlerChrysler revealed its latest restructuring plan for Chrysler almost six years to the day after its first attempt at shoring up profits. Zetsche ran Chrysler until taking the top spot in Stuttgart last year.

Although growing ranks of shareholders would like to see Chrysler go, selling it is easier said than done. In Cologne, Germany, Bank Sal. Oppenheim analyst Michael Raab estimates it would cost $34 billion to separate the two businesses.

Analysts say a real stumbling block is the roughly $23.6 billion in unfunded pensions and health care liabilities for retirees that any buyer would want financed in full.

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I see what is going on here. See the big picture.. I am also saying what I stated below just to spark some "what if " conversations conversation not a debate.

Facts:

The American Automobile industry is in BIG trouble. We are sinking. We are not swimming. Too many people are in denial about this one.

GM is on the mend and is "slowly" turning things around.

Toyota is big and "powerful". They are sucking up everything the see just to become number one. Having factories here and being in NASCAR IS NOT ENOUGH. The only way to save our industry is to keep Toyota at bay. Toyota would buy Chrysler just to become number one automaker and to become "Americanized"

Bob Lutz worked at Chrysler. He knows the company.

That Kervorkian guy would eat this up and sell off the parts crippling the American automotive industry.

GM is considering this to save the industry. Sometimes it takes a team effort to fight off the attacks. If GM did this, they would have the size to keep Toyota at bay for a bit. GM would have to do to Chrysler what it did to its own company.

If Chrysler dies, we would not have an industry because Ford is not in good shape financial or product wise.

GM with all the products "coming" cannot fend Toyota or attacks forever. The products are not here...

Buying Chrysler buys time and gives GM size.

How can the brands co exist:

You would have to get rid of a lot of Chrysler and "GM" cars

The brands would become smaller and more focused. The only big "global" GM brands would be Chevrolet, Cadillac and Opel.

The niche brands would be:

SAAB, Pontiac, Buick, Hummer

If GM did this:

Cadillac could move upscale more so.

Buick and Chrysler would be the middle.

Saturn would be imports.

Something major has to happen between Pontiac and Dodge. Dodge has things Chevrolet sells and Pontiac sells.

If you had 4 Suburbans: Chevy, GMC, Chrysler, Cadillac the cost would be spread out.

Corvette and Viper and XLR would share production costs

Holden and Daewoo some how would play a bigger role too.

Buying Chrysler also would take them out of the Australian market and European market too. No need to have them there unless they are successful in those places.

Also no one sees the big picture.. That is one less competitor GM has to worry about.

GM gets that minivan to compete.

You can merge: Jeep and Hummer

You can also merge: Chrysler and Buick and Pontiac and GMC

Dodge is still odd man out. But if we look at sales, Pontiac is odd man out as well as Buick.

GM has a partnership with Shanghai Automotive( Shanghai GM) and they buy part of this too. This in turn opens the door for Chinese cars to get to America.

The drawbacks:

Ford will be in a bad postion. It will become weaker unless it too does an alliance.

Too many cars and too many divisions

GM becomes top heavy again

The factories, the dealerships, the health care and pensions..

Chrysler dies, gets sold off in parts or whole and completely falls as most wish for her, our economy is impacted, and A LOT of people lose their jobs and eventually it impacts us all ( those that do not live near a factory or some part of the industry.)

Edited by NINETY EIGHT REGENCY

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Not gonna happen.

If GM does this, it will go down as the stupidest corp. acquisition in history.

And GM said in the 1990's they were not going to get rid of Oldsmobile. We believed them. You saw what happened. They are still paying for that one.

And GM said Pontiacs would not be a rebadge of other GM products:

Have you looked at the Pontiac line up lately?

And GM said Buick was going to get money and new products.

It appears Buick China is in better shape than Buick America and out sells them too and Buick America so far only has one new vehicle coming to market as it loses three.

After my experience with what GM did with Oldsmobile, I put NOTHING past GM. I used to be one of the "blindly" follow GM.

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Unless Chrysler is going to be sold super cheap ($50 or so, thats about what they're worth) GM has better uses for the money.

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I don't see GM buying Chrysler.

I see the chinese consortium buying chrysler.

they have money to burn and want to get into the US market.

If GM does buy this brand..its just to sell off to the chinese in various parts and to keep their hold on the chinese marketplace

growing.

I really don't see GM making this happen but who knows.

Thanks for the heads up.

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Chrysler comes with $55 billion in liabilities!

I just can't envision a scenario where the deal makes sense.

A Ford/Chrysler merger almost makes more sense to me.

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GM knows something we do not. It interesting Chrysler is laying off 13,000 people right too as all this is going on.

Another thing.. should this "happen" this GM forum and many others like it would have to totally redo their sites.

Edited by NINETY EIGHT REGENCY

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What a frickin' mess! Thanks, mercedes benz! Good job, Dieter, vote yourself another multi-million dollar bonus! Break it up into a few checks- it'll look better.

>>"This in turn opens the door for Chinese cars to get to America."<<

Please God; no.

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I still do not see the benefit of GM buying Chrysler.

I would however like to see a group of american investors buy Chrysler.

But, the writing is on the wall... It's Chryslers turn, yet again, to take the fall (and die this time) Next to go will be Ford (because they never really recovered anyway) Then in 10 years we'll see GM weakened to the point of death.

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The question is can Daimler package Chrysler in a way that makes sense for GM? Suppose Daimler sells Chrysler to GM for $1 and offers to help out with the pension and health liabilities and employee buyouts? Would the sale make sense then? Might this be a less expensive and quicker alternative for Daimler?

Product-wise it's a no-brainer. Chrysler factories mostly get the boot while the new Chryslers and Dodges get the Zeta, GMT-900, and Epsilon II treatment. Major economies of scale for GM and its factories run at a Toyota-like 100% capacity. Chrysler, Dodge and Jeep continue to run as one division. This could work.

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I think if GM went through with this they might be dealing with some major antitrust issues.

NINETY EIGHT, I like the way you planned out the purchase. It actually makes a lot of sense. I really don't want this to happen, but if it has to, I would like it to be that way.

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I really hope this doesn't happen. If GM thinks it needs more brands, why don't they make some more?

I don't think that's the issue here though. They want to save Chrysler? I think they should buy Jeep and let Dodge and Chrysler wither and die, and benefit by gaining market share from Chrysler dying.

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I'm going to be very evil here...

Recent downsizing: GM 40k, Ford 38k, DCX's upcoming 13k. total: approx 91,000 jobs

Chrysler Group will only employ about 75,000 in North America after the 13k are gone.

Would it really hurt that much to let Chrysler Group go under? Sure 75,000 will lose their jobs but that opens up around 12% of the US market to everyone. If Ford & GM could pick up half of that, it might turn the tide at Ford and it would definitely buoy GM until its revitalization plan is complete. I'm sure there will be plants available for purchase if GM & Ford need extra capacity.

We already know the overlap is incredible betwen GM & Chrysler Group divisions... just let the Detroit (Auburn Hills) soap opera play out.

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I think if GM went through with this they might be dealing with some major antitrust issues.

NINETY EIGHT, I like the way you planned out the purchase. It actually makes a lot of sense. I really don't want this to happen, but if it has to, I would like it to be that way.

Yeah we all know what antitrust did with AT&T... It let them become the same company they were in the 80s. :D

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Its funny how on this forum, if its not GM, its total &#036;h&#33;...even regardless of the fact that its a GM fansite.

I'm with the camp that says GM shouldn't buy Chrysler, but unlike apparently everyone else on this forum, the next logical step to me isn't to let the company die. With more products like the LX cars and maybe another brand or two, I think Chrysler would be able to stand on its own again, which is definitely what I'd rather see than to have a huge chunk of the American auto industry die.

Edited by AxelTheRed

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Why on earth would GM want to add more high cost UAW and CAW plants to its portfolio, along with tens of billions of health care and pension liabilities?

Let DCX spin off Chrysler, with bankruptcy within 5 years, then GM can pick up the Jeep brand for peanuts.

Edited by ehaase

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The American Automobile industry is in BIG trouble. We are sinking. We are not swimming. Too many people are in denial about this one.

Toyota would buy Chrysler just to become number one automaker and to become "Americanized"

Also no one sees the big picture.. That is one less competitor GM has to worry about.

1. I don't think anyone denies the American automobile industry is dying. I just don't think most of the American public cares.

2. Toyota is too smart to buy Chrysler and have to deal with those highly unionized plants. There were articles last week that Toyota is already concerned about high labor costs at it own U.S. plants.

3. GM doesn't worry about Chrysler. GM worries about Toyota, Honda, and BMW.

There has speculation for 20 years that eventually some large automakers will go out of business. I am surprised that we have not seen it happen yet. It is inevitable that Ford and Chrysler will either seriously downsize or go out of business. I hate what is happening, but there is no denial that Toyota is brilliantly managed and is producing cars that delight most of its customers.

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I would agree that a Chrysler package would incur a lot of headaches & liabilities for the buyer, and that toyota would not be a possibility.... EXCEPT for the fact that there's 2 other things at play: toyota's relentless focus on being #1 and their push to be more "American".

This entire scenario in general ('Who wants to buy Chrysler?') makes me sick.

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I would love to see DCX stay alive, but having said that GM has enough problems and is turning GM around not another company that is screwed. Let Benz bail them out, they got money. GM needs its money for products, products and products. I don't think they will do it if there smart, Toyota would have been all-over it if it was a deal.

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NO.

There is nothing for GM to gain from this at all. A company like Chrysler would be hard to incorporate into its already massive structure, and except for minivans and nearly as much experience with turbocharged engines as SAAB, GM has all it needs. New rear-drive architectures, advanced engines and transmissions, and a truly global presence.

There is no way that Chrysler should die. The only way it will die completely is if Daimler-Benz keeps it until it withers away, and then they would try to keep Jeep for themselves. I would also doubt that Toyota would even consider the purchase of Chrysler in a mere effort to become Americanized. With each generation that experiences Toyota's presence and knows of the fact that they have factories in the U.S. will probably see them as an "American" company anyway. Rather as like I am sure that there are some Britains that feel Vauxhall is as British as tea time.

I feel that the best thing for Chrylser now would for them in their entirety to be spun off and set free. Chrysler could take care of itself idependently much better than having to obey anyone else. I've heard that Chrysler is only worth around $6 billion now, and was purchased for $36 billion back in 1998 by Daimler-Benz. THAT'S what foreign ownership did for Chrysler.

Even if GM did somehow attain Chrysler, the only thing Chrysler could reall benefit from that would be Lutz. Chrysler turned itself around underhim and turned out some great product and amazing concepts.

Freedom for Chrysler Corporation!

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And, if they are so desperate to get rid of Chrysler, DCX and Deutsche Bank might as well give it to me.

I'd kill the Compass and call for upgrades in the other vehicles, among other changes. Screw the idea of "DCX". It's no good and never was.

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This would be an insane match up.

The only thing I'd miss if Chrysler split up with Daimler would be quasi-E Class based LX cars (Charger and 300C). Two of my favorite sedans in the North American market right now actually. However, the rest of the Chrysler lineup, save for maybe some of the Jeeps, is really not that interesting to me. But I digress.

But I think at the end of the day, Automotive News, MSNBC, CNNMoney, etc, etc. just like having people click on their links to read their stories. This is completely 100% media driven rumors - GM and DCX probably meet constantly to talk about potential business tie ups, it's just that this time DCX is under the microscope because they've been talking about "all options being on the table" for Chrysler.

My predicition - DCX keeps Chrysler, lays off tons of people, starts making a profit again next year, and this will all be more or less forgotten by summer of 2008 or so. I remember reading on every automotive and financial website in the fall of 2005 that GM was about to go bankrupt...remember that? Now their stock price has doubled, and their upcoming products are getting fairly positive reviews. Remember GM fans, our big worry last year? That GM would somehow be tied up with Renault?? Now we all knew that would never happen. Same thing with DCX selling off Chrysler. Honestly, I hope I'm right, Chrysler coming out with the 300C is proof that when they really want to, they can come up with some pretty interesting products.

Another thought is this, Chrysler may be in a funk right now, but when times are good, DCX would be very sorry they got rid of Chrysler...esp. if the truck market ever picks up again. Might be a big if, but who knows? This is America, and we do love our trucks and SUVs, despite gas being $2.30/gallon.

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A quote I found an a article online explains it all:

"Part of it may be defensive of GM's part,'' said John Novak, an analyst at Morningstar Investment Service in Chicago with a ``fully valued'' rating on DaimlerChrysler and a ``slightly overvalued'' on GM. ``A nightmare scenario for them would be Nissan-Renault, with their global footprint, getting control of Chrysler.''

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