Chrysler is sold
DaimlerChrysler group is split with £3.7bn sale
The sale is worth £3.7bn and concludes after three months of negotiations. It’s been a difficult nine years since the group was formed; Chrysler was valued at £18bn back in 1999 and is worth only £4.66bn today.
Daimler Chrysler has given some insight into the reasons behind the sale, citing a lack of future synergies and cost-savings: “The synergies possible between Mercedes-Benz and Chrysler have been fully utilised. Additional potential for collaboration is limited between two businesses operating in such different market segments. The strong volatility and pressure on margins in the Chrysler Group’s North American core market have an increasingly negative impact on DaimlerChrysler’s overall profitability and share-price development.”
Although the newly-formed Daimler AG will continue to work with Chrysler on existing projects, it remains to be seen how the new Chrysler Corporation LLC will manage to fund a new range of platforms. Currently, much of Chrysler’s vehicles use previous-generation Mercedes Benz technology such as the old E class platform for the 300C/Dodge Charger. Clearly this technology will need replacing in the not too distance future.
Significantly, Chrysler’s pension and health insurance liabilities will transfer to the new Cerberus-owned company. Analysts value this liability at around $19bn (£9.6bn) alone.
Cerberus chairman John W. Snow said: "We welcome Chrysler into the Cerberus family of companies and believe Cerberus will be a good home for Chrysler. Cerberus believes in the inherent strength of US manufacturing and of the US auto industry. Most importantly, we believe in Chrysler.
"We would like to thank DaimlerChrysler for their good stewardship of this American icon over the last decade. We are aware that Chrysler faces significant challenges, but we are confident that they can and will be overcome. A private investment firm like Cerberus will provide management with the opportunity to focus on their long-term plans rather than the pressures of short-term earnings expectations."
DaimlerChrysler chief Dieter Zetsche was bullish about Daimler’s goals for the future: "We will be the leading manufacturer of premium products and a provider of premium services in every market segment we serve worldwide. And we will pursue our commitment to excellence based on a common culture, a great heritage of innovation and pioneering achievements and – with Mercedes-Benz – the strongest automotive brand in the world."
It seems to me that Daimler aren't really interested in anything further than the Mercedes-Benz brand. They seem to have cut and run from Smart (bar the token retention of the ForTwo), and could have made a better effort of the Chrysler partnership. I think that diversification is the key in the future automotive market. BMW's branch out into MINI means they can offer (in most cases several) cars to suit every pocket between £10k and £90k. Whilst Merc might make a lot of margin per car, I doubt they'll sell enough to earn the cash to keep VW, Toyota, et al, at bay.
They need to!
Sure do. I wouldn't buy one!
Not what the other thread reports. The NAW have been reported as saying they welcome it. I think it was this or inevitable redundancies.
And MB products started to step off before the DC merger.
As for Chrysler, they had/have a fairly good relationship with Mitsubishi for some time, so there could be some platform sharing go on there. And there are still plenty of car makers across the globe who don't get as much out of economies of scale as they could, but would be interested in platform sharing and the like. I am thinking a partnership with Mitsubishi & PSA or one with Renault/Nissan.
BMW seemto disagree as well. Their current review of Volvo would point to an intention of reusing their (BMW RWD, MINI FWD) platforms with Volvo skins.
BMW seemto disagree as well. Their current review of Volvo would point to an intention of reusing their (BMW RWD, MINI FWD) platforms with Volvo skins.
Did I miss something? I'm sure last time I looked Volvo were owned by Ford...
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Jonathon
Yes but they have been contemplating purchasing Volvo!
Yes, but...
www.autocar.co.uk/News/NewsArticle/BMW-X5/225528/
John
My thoughts exaclty... Why on earth did Merc buy into this leviathan? IMHO all they ever got out of it was a legacy of underused factories, union wrangling and crap, underdeveloped, ugly or plain boring model lineups...
Who was that then?
.....don't worry, in a few years Toyota will buy the 'big three' outright, after heavy losses, health care and pension rights issues have brought them to their knees (or are they there already?)??? 
Not far off the truth.
The 'Big 3' have been mired in a combination of legacy union deals and pension liabilities, combined with major-league complacency in their home market. 'yota (and the other Japs) have come along, taken market-share everywhere they don't "salute the flag every time they pee", and shown how US workers CAN be efficient. Result is, IIRC, 'yota's market cap far exceeds those three put together.
Ford actually seem to be trying to sort themselves out the right way - product-led - but it's a financially-uphill battle given their credit-rating (Ford Credit has been carrying Ford US for AGES...billions of profit in FC, billions of losses in FUS...yet the recent credit rating drops have badly hit FC's cost-base).
GM looks more healthy until you review their product line-up, and sorry to say but that dinosaur Lutz needs to go if they're not to end up in Chapter-11. And their credit rating is also heading south quickly.
Chrysler has been the 'US patient' for about a decade, and needs the biggest shake-up to actually get anywhere.
It'll be interesting to see what is left in 5 years. My guess is a newly-healthy (or healthier) Ford, a GM that is 'bouncing back' but perhaps too slowly, and as for Chrysler...no ideas, as don't know much about Cerberus.
Personally I would rather have a Chrysler 300 or a Dodge Magnum over a Mercedes anyway but they would be even better cars had they been allowed to be.
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