NINETY EIGHT REGENCY

Hyundai revs up in race for Chrysler deal

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Hyundai revs up in race for Chrysler deal

Louise Armitstead and Dominic O’Connell

The Korean industrial giant Hyundai is leading a pack of international suitors for Chrysler, the troubled US arm of automotive manufacturer Daimler Chrysler.

A takeover of Chrysler by Hyundai, which makes cars under its own brand as well as controlling the Kia marque, would be a watershed for American business.

Alongside Ford and General Motors (GM), Chrysler is one of Detroit’s big-three manufacturers. Together they have fought a fierce and largely losing battle for three decades against low-cost competition from Asian rivals including, latterly, Hyundai.

GM, still the world’s biggest car company, is also interested in buying Chrysler, a move that would speed a much-needed reduction of output by North American carmakers. GM was reported last week to have held exploratory talks with Daimler Chrysler executives.

Chrysler could be worth about £7 billion, although the purchase price would have to take into account the company’s pension deficit and mounting health-care costs, as well as the expense of closing factories.

Hyundai and other foreign bidders are said to be eager to secure access to Chrysler’s valuable dealer network. A senior banking source said that while Hyundai and GM were regarded as being in the lead, there were several potential buyers, including Chinese groups and private-equity firms.

Chrysler has been put in play by Daimler Chrysler, its German parent company. Last week, Daimler Chrysler chairman Dieter Zetsche said investment bank JP Morgan had been hired to review its future, saying “all options” were being considered.

Confirmation that Chrysler was up for grabs came alongside a tough cost-cutting programme, the third turnround plan introduced since Daimler, the German automotive group that owns Mercedes-Benz, bought the American company in 1998.

Zetsche, who was sent from Germany to run Chrysler before taking the chairmanship, said 13,000 jobs would go, along with up to 15% of dealerships and as many as one-fifth of models.

Chrysler is likely to report another big loss this year, including a restructuring charge of up to €1 billion (£675m).

Daimler’s purchase of Chrysler was one of the most ambitious transatlantic business deals ever. Jurgen Schremp, then Daimler’s chief executive, believed the takeover — which was presented as a merger of equals although Daimler held the majority stake — would transform his company into the world’s premium automotive group.

But despite the occasional good year, Daimler has struggled to turn Chrysler round. Like the other members of the Detroit big three, it has been hampered by ageing factories, an unattractive product lineup, and rising pension and health-care costs.

Hyundai already has a link with Chrysler through the World Engine Programme, a three-way manufacturing alliance that joins the two groups with Japan’s Mitsubishi. The companies combined to develop a new range of four-cylinder engines.

Car-industry sources say the other possible bidders for Chrysler would be China’s Chery and SAIC, two automotive companies with global ambitions.

SAIC has expanded rapidly in recent years, and two years ago made an abortive attempt to buy MG Rover. SAIC withdrew, but not before securing the rights to Rover designs. MG Rover later collapsed into administration.

Chery recently struck a collaboration deal with Chrysler under which it would make small cars to be sold in America through the Chrysler dealer network.

***Got this from another source online.

It is also discussed at autoblog as well:

http://www.autoblog.com/2007/02/18/the-plo...g-for-chrysler/

Edited by NINETY EIGHT REGENCY

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Hyundai's corporate culture, as been reported, is very dictatorial unlike (at least the old) Chrysler. Hard to see this marriage working.

On the other hand, GM (especially with Lutz) and Chrysler is easier to imagine. With GM, there would be no unintended insults or misunderstandings because of East/West differences nor any language translation issues.

If Daimler sweetens the deal I think the minivans, Jeep, Hemi, and the extra outlet for GM platforms might make it worth it. Perhaps GM could do something similar to Daewoo where it doesn't buy everything all at once?

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The worst that could happen is Chrysler becoming Chinese

The next worst thing is GM buying it

I actually have sort of liked Hyundai cars lately (except Kia) much better than Toyoat, honda, ect.

We're car freaks, but its not just cars..Toshiba, Sony, & Toyota, Honda, Nissan all need to have their playing field leveled with that of their American counterparts. Next comes the perception problem. But as long as Asian cars have an economic advantage, American cars will either match/exceed their quality and cost more, or match their cost and be of lesser quality.

I am not for Hyundai to buy Chrysler, but so far they are the best candidate that has come up.

The IDEAL candidate would be any private/public American company.

Edited by vrazzhledazzle

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aaaantoine    4

The worst that could happen is Chrysler becoming Chinese

I don't think there are any Chinese firms out there pining to own Chrysler... But then again, if a Chinese company did buy Chrysler, they would have a massive inroad into the American market.

On the other hand, the South Korea-based Hyundai already has market share in the US. Buying Chrysler would give them access to all sorts of things, and suddenly, they would be as big a player as Toyota.

Hyundai's in a strong position and they could easily buy out Chrysler. Unlike GM.

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I don't think there are any Chinese firms out there pining to own Chrysler... But then again, if a Chinese company did buy Chrysler, they would have a massive inroad into the American market.

On the other hand, the South Korea-based Hyundai already has market share in the US. Buying Chrysler would give them access to all sorts of things, and suddenly, they would be as big a player as Toyota.

Hyundai's in a strong position and they could easily buy out Chrysler. Unlike GM.

Well, the article mentioned Chinese companies possibly buying Chrysler, and I don't want any more Asian crap over here. Same with Hyudai........we don't need another toyota. But at least they're doing a decent job with their recent cars and they aren't a GIANT yet meaning they still care about other things instead of about how to become the #1 automaker. I would describe their cars as 'stylishly bland' and their warranty program......neither of these things would be bad for chrysler.

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Cleary this must be some kind of joke right? Hyundai to buy Chrysler? Jesus Christ what the hell is this world coming to?

Guys we need to band together and buy Chrysler, yes I know we're GM fans...but for the love of God this cannot happen. What's next a 300C and 300XG on the same platform? :nono:

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VenSeattle    8

I actually think this would benefit Chrysler & Hyundai. Hyundai and Kia feel the need to move upscale but it's a long road ahead for both of them. Chrysler Group has very little overlap and would resolve the issue of pushing Hyundai even further upscale.

Kia = Budget volume (Plymouth replacement)

Dodge = Performance, Trucks, Value

Hyundai = Mainstream to Premium brand - true import/domestic fighter (Eagle replacement? but far more successful)

Jeep = Premium SUV/Off-roading

Chrysler = Luxury (Imperial Brand could also be brought back. The sky's the limit with Mercedes-Benz out of the picture)

Hyundai-Kia would benefit in several ways via the Chrysler Group: LX platform, minivan innovation, HUGE dealership network would open up major possibilities for Kia/Hyundai franchise expansion into less urban communities, extra production capacity in the US & Canada, etc

Chrysler Group would finally get an owner that would be interested in actually expanding all Chrysler Group brands to their fullest potential.

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FAPTurbo    1,074

Chrysler Group would finally get an owner that would be interested in actually expanding all Chrysler Group brands to their fullest potential.

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Intrepidation    846

I hope North Korean launches an attack on Hyundai the day after such a thing like purchasing Chrysler were to happen. I wouldn't want GM to buy them either. I wish Chrysler could just become it's own company. The only thing Daimler gave Chrysler that was any good was the basis for the LX platform, but if I remember right Chrysler was working on a RWD platform prior to the takeover anyway. Daimler has done nothing good for Chrysler besides that, and have inhibited things like the ME-412 from being produced because the wankers in Germany were pissed that Chrysler could do what AMG did with the SLR for a fraction of the cost.

Chrsyler should be its own company again, and rejoin as a true part of the Big 3...but with it's financial problems I don't see how that would happen.

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intrigued    9

I would love to see Chysler get bought out by Hundai or some other comeptitor, Anyone besides GM! The ensuing development gaps, integration costs and beuractatic squabbling would likely seriously hur the Crysler group and whoever bought them out leaving GM room to absorb customers from the hurting brands. I would let one Chrysler or Ford die in a second if it assured GM more success. GM is the only company that concerns me. All ther others can shove off, especially Chrysler, it hasnt been an american company since 1998.

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ocnblu    731
Jeep, Chrysler and Dodge, as brands, are very valuable. The LX cars and the Wrangler, maybe an SRT-4 Caliber, however, are the only Mopar products I'd spend my own money on, looking at the lineup today, 2.19.07. Edited by ocnblu

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regfootball    234

Jeep has worth. You still have a few devoted Chrysler fans. There are a few Dodge truck loyalists. If Chrysler wilts, mostly I doubt anyone cares. Which is sad....if GM buys Chrysler, my fear is they gain no market share, it all gets divided upon our import humping citizneship in Amurcha.

Edited by regfootball

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LosAngeles    2

Why is there no word of a French company being interested?

Not Renault (since they're all mixed up with Nissan)...

But PSA Peugeot Citroen?

Two makes I'd love to see back in this market.

Neither of which would necessarily step on the toes of Chrysler products. Plus they could use some of the factories for the French stuff.

I could see Hyundai somewhat, but the idea of either of the Big Two buying Chrysler frightens me (because all that spells is a big fat fold to me)

Yeah, Dodgefan, they should be independent once more, but that requires an American with deep pockets and actual interest in Chrysler's success to do such.

Our best bet likely is the Chinese.

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thegriffon    5

PSA doesn't have the money.

There hasn't been any open interest from the Chinese, but a dark horse may appear allied with Magna—Gruppo GAZ (which has already bought the Sebring/Stratus tooling and is buying the Mexican-built 2.4s) may may make a play to ensure a supply of engines and new vehicles. The Dodge Sprinter could be replaced by the Dodge Gazel.

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