[GenManagerS]

Mergers in the auto business usually mean a death knell for at least one of the manufacturers involved.

Studebaker-Packard.... Hudson-Nash.... Chrysler-AMC.

This does not look good:


Chrysler, GM Discuss Merger, Acquisition

By THE ASSOCIATED PRESS
Published: October 11, 2008
Filed at 12:56 a.m. ET

DETROIT (AP) -- General Motors Corp. and Chrysler LLC have held preliminary talks about a merger or an acquisition of Chrysler by GM, according to published reports Saturday.

The Wall Street Journal, citing people it described as familiar with the discussions, said Cerberus Capital Management, the private equity firm that owns 80.1 percent of Chrysler and 51 percent of GMAC Financial Services, proposed trading Chrysler's automotive operations to GM. The Journal said Cerberus would receive GM's remaining 49 percent stake in GMAC.

The New York Times, also citing people familiar with the talks, said the automakers were discussing a merger. The Times did not mention GMAC, a traditional auto lender hit hard by the housing market downturn.

The talks have stalled because of the recent turmoil in the financial markets, according to the Journal. Its sources said negotiations could resume if markets stabilize because both GM and Cerberus want to quickly divest the assets under discussion.

The negotiations between 100-year-old GM and 83-year-old Chrysler began more than a month ago, according to the Times. Its sources said the chances of a merger were ''50-50'' as of Friday and likely would take weeks to complete.

Both newspapers posted their stories on their Web sites late Friday.

''Without referencing this specific rumor, as we've often said, GM officials routinely discuss issues of mutual interest with other automakers,'' GM spokesman Tony Cervone said.

Chrysler spokeswoman Shawn Morgan declined com

[neerewed]

Yeah, and GM privately held merger talks with Ford back in July. So what?

The bottom line is all 3 are in the dumps, and based on the numbers I've seen, they'll all be out of cash by the end of next year, if not sooner. Given that the world is heading into a recession, that means at least one will go bankrupt, and at least one other will be forced into a partnership with a Japanese or European automaker. I've read Chrysler is trying to partner up with Renault-Nissan.

[suidinguilelf]

Name one merger among American Car companies during the last 60 years or so that was a success for all parties involved.

Yes, I know.... so what.... they're broke... it's the only way out ... there's no other alternative.... blah... blah blah.... all true....but in the meantime : Name one merger among American Car companies during the last 60 years or so that was a success for all parties involved.

Here's my prediction, based on my vast knowlege of the automobile industry:

GM will use Chrysler's engineering and global dealer network and spit out the rest (except for the Jeep brand). GM killed Olds... it is rumoured to be considering killing Buick.... and the brand Pontiac means nothing today... so I doubt that GM is going to polish the Chrysler and Dodge nameplates. Actually of those 2 brands, Dodge would probably be the most favoured and could replace Pontiac.

So.... bye, bye Chrysler? I say that if this merger goes through.... yes: bye, bye Chrysler.

[sueplydup]

GM will use Chrysler's engineering and global dealer network and spit out the rest (except for the Jeep brand).

The Jeep

Willys-Overland Motors began production of the Jeep (Willys MB) in 1941 for the US military. Up until 1920, Willys-Overland was the 2nd largest auto company in the US, behind Ford Motor Co.

The 1920 recession nearly bankrupted the company. The banks retained Walter Chrysler, who founded the Chrysler Corporation in 1925, to restructure Willys-Overland.

The Elizabeth NJ plant, formerly of the Duesenberg Motor Company, was sold to Bill Crapo Durant, who was a founder of General Motors in 1908.

In 1953, Willys merged with Kaiser-Frazer to form Kaiser-Jeep.

In 1954, the Hudson Motor Car Company merged with Nash-Kelvinator to form American Motors Corporation.

In 1970, American Motors bought Kaiser Jeep, changing the name of the subsidiary to the Jeep Corporation. The company introduced the Eagle model in 1979.

In 1987, the Chrysler Corp bought American Motors, forming the Jeep-Eagle Division. The Eagle ceased production in 1988, but the Jeep brand endures.

And here we are today. Walter Chrysler and Bill Durant together again.

[Siffidiolla]

Then if I were GM their Amrican line up would look like this : Cadillac, Chevrolet, Corvette (becoming it's own stand-alone luxury/performance brand...imagine BMW+Porsche), Jeep and Volt (electrics).

And that's it. All of those other names: Buick, Pontiac, Saturn... who cares?)

[plalleste]

If I am not mistaken Fab, Saturn was doing pretty well.

I think it was a commercial experiment to make a micro-managed offshoot to try a new brand line and mode of operation (MSRP = Actual Price, not a haggling position).

People liked it. But it seems to be expanding too much. Like what was pointed out to me recently, a company that goes public not only has to make money, but it has to make MORE money each year. It has to grow.

So it does not matter if your current company netted a gross 5% profit last year, the stockholders want 6% this year.

Example? Dunken Donuts Flatbread Sandwiches. Needless expansion of a solid brand name in the interest of market position.






So back to point, is Saturn still doing well, or has it grown too fat and tanked as well?

[doogiehoussi]

Autos October 17, 2008, 7:40PM EST

Under the Hood of a GM-Chrysler Merger

BusinessWeek has learned details of the proposed merger between GM and Chrysler. The rewards are huge—but so are the obstacles

By David Welch

As top executives at General Motors (GM) and Chrysler owner Cerberus Capital Management continue to talk about a merger, the most popular scenario at this point would still have all three companies joined at the hip.

Talks between the two companies continue, and while a deal is far from certain, the two sides are narrowing in on a merger structure that both think could work, BusinessWeek has learned. The basic outcome has GM folding Chrysler's auto business into its own while Cerberus would merge lending arm Chrysler Financial Services and GMAC Financial Services. Cerberus owns 51% of GMAC while GM owns the rest.

If that deal goes through, GM would end up owning a minority piece of the merged finance company and Cerberus would still have a stake in GM. While many analysts have figured that Cerberus would retreat from the car business, the private equity firm would remain deeply in the game. If the deal ends up working this way, every company involved has a vested interest in seeing the other succeed. It would still behoove Cerberus to run the combined lender so that it helps sell more GM and Chrysler cars.

Such a deal would give GM the chunk of revenue from Chrysler's estimated 1.4 million customers and the $11 billion in cash on Chrysler's books. Meanwhile, Cerberus would acquire the merged lending business it has wanted since it acquired Chrysler from Daimler (BusinessWeek.com, 5/14/07) more than a year ago.
A Win-Win

Sources close to both companies say that if the two lenders and two automakers are combined, all would have better balance sheets. Then they can weather the storm and get to 2010, when executives on both sides think a new health-care deal with the United Auto Workers will save money, and auto sales will rebound from today's dismal levels.

But there are many hurdles to getting a deal done and making the synergies work. Both sides need to agree on what the traded assets are worth. Even if they do, there are issues to be worked out with the unions, who will be fearful of massive layoffs. One source close to the talks says that GM Chairman and CEO G. Richard Wagoner Jr. is keen on the merger but is moving very cautiously. He does not want to forge such an historic tieup if the risk of failure is too great.

The merged car company would have a dizzying 11 brands to manage and more than 10 million vehicles in global sales a year with automotive revenue of roughly $220 billion.

GM executives think they can benefit from Chrysler's cash and revenue, while cutting thousands of headquarters jobs and overhead to create a profitable revenue stream. One source close to the talks said that GM "will save billions at the start and many billions more in the future" if they do the deal.
Clock Is Ticking

But with both companies burning cash, they will have to race to get those savings. "The classic merger arguments don't apply because they don't have the time to realize them," says Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Mich. "If the recession is as deep as everyone thinks, GM could run out of cash next year."

As for the combined lending company, in the past GM has rebuffed the idea of merging them for fear of diluting the company's ownership in GMAC. When Cerberus bought Chrysler from former parent Daimler (DAI) in May 2007, the private equity giant had to carve Chrysler Financial out from Daimler's lending operation and rebuild some of the back-office and loan-approval operations.

If Cerberus can merge GMAC and Chrysler Financial, they could save millions in back-office costs. In the long run, the merged financial company could boost margins. Since Chrysler Financial doesn't have mortgage operations and had limited exposure to its leasing, its total portfolio has fewer problems. With cost savings and Chrysler Financial's stronger balance sheet, the combined lender might be able to raise more capital for loans.

GMAC recently told dealers that it will only loan money for car buyers with credit scores of more than 700, which means nonprime and subprime borrowers must go elsewhere. GM has even offered its dealers incentives to get those buyers financed with banks and other lending sources.
Funding Shortage

GMAC's problem is that the finance company doesn't have enough funds to do much more than give dealers financing to buy cars from GM and make loans to prime-credit buyers.

So merging the two finance companies could be a way to save money, fix the problems at both, and raise their credit ratings.

For GM's part, the company would have an even smaller stake in the lender that it relies upon for car loans. But company executives say privately that Cerberus already controls GMAC and can call the shots with its 51% ownership stake.

Getting synergies from merging two financiers is easy to see, but it would be much tougher for GM to make Chrysler work, says Maryann Keller, an auto industry consultant who sits on the boards of rental-car company Dollar/Thrifty (DTG) and dealer Lithia Motors (LAD).
Too Sprawling?

Keller and other critics of the deal say that GM would have its hands full trying to consolidate product lines and close plants. Plus, the merged automaker would have more than 10,000 dealers—far more than it needs for the roughly 5 million cars the combined company would sell every year in the U.S.

GM would also have to deal with the incredible complexity of designing cars and marketing for 11 different brands. Dumping any one of them means getting rid of the dealers who have invested in franchises to sell those brands.

Plus, Chrysler may need more repairs. Sales are down 30% this year and analysts say the company has a dearth of new product coming. "Just looking at the future of Chrysler's product lineup, there's very little of any significance in the near term," says Eric Noble, president of The CarLab, an auto industry consulting firm in Orange, Calif.
Labor Concerns

Then there's the union. United Auto Workers President Ron Gettelfinger has already said he doesn't favor any merger that means cutting more jobs. Unless GM decides to keep every Chrysler product line and all of the workers and factories who make them—which would negate the reason for doing the deal in the first place—management would have to negotiate painful cuts with the UAW and buy out workers. In the past few years, GM has bought out thousands of workers at a cost of about $100,000 each.

It could do the same with Chrysler's workers. But they are younger and may not be ready to take an early-retirement package. The union has so far not accepted mandatory buyouts.

GM would have an even tougher time cutting brands and managing such a big and complex company. And that's another reason the company hasn't cut a deal yet. This would create a giant. GM doesn't want to create a behemoth that takes a long fall.

Welch is BusinessWeek's Detroit bureau chief.

Copyright 2000-2008 by The McGraw-Hill Companies Inc. All rights reserved.

[courlerwele]

America has been building crap for decades. These companies deserve to go out of business, and the greedy SOB's at the UAW who drove them to the brink of bankruptcy also deserve their current status.

[Pete789]

Fiat May Expand U.S. Market Foothold by Buying Chrysler Stake


By Mike Ramsey

Jan. 19 (Bloomberg) -- Fiat SpA, the Italian automaker that sells only Ferraris and Maseratis in the U.S., may be close to a deal to acquire a stake in Chrysler LLC to expand in the world’s largest auto market.

Fiat has an agreement in principle to acquire as much as 35 percent of Auburn Hills, Michigan-based Chrysler, the Financial Times of London reported, citing people familiar with the negotiations.

The non-cash deal would give Turin-based Fiat access to Chrysler’s dealership and manufacturing network in the U.S., the FT said. Fiat had been in discussions with multiple U.S. automakers about using their manufacturing facilities to build vehicles in the U.S. In August, Chrysler President Tom LaSorda said Chrysler had been approached by Fiat.

“In today’s economic environment, talks are going on between companies in all industries, ours is no different,” said Lori McTavish, a spokeswoman for Chrysler, in an e-mailed statement. She declined to comment further.

Chrysler would tap Fiat’s experience building small and medium-sized cars to accelerate its own plans to bring out new front-wheel drive vehicles offering lower emissions, while Fiat may use Chrysler’s North American production and distribution network to introduce the Alfa Romeo brand and Fiat 500 minicar in the U.S., Automotive News Europe reported today.

Chrysler, owned 80.1 percent by Cerberus Capital Management LP, is working on a restructuring plan to cut its debt level by two-thirds and strike a new labor deal to lower costs as part of a government mandate after getting a $4 billion loan from the U.S. Treasury to prevent failure.

Chrysler, in a plan submitted to the U.S. Congress in December, said alliances and partnerships were a critical part of the company’s plans for viability. Chrysler already has product partnerships with Volkswagen AG and Nissan Motor Co.

To contact the reporter on this story: Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net

Last Updated: January 19, 2009 16:55 EST

[Dndjzirw]

JANUARY 20, 2009, 7:50 A.M. ET

Announcement of the Fiat-Chrysler Alliance

Fiat Group, Chrysler LLC and Cerberus Capital Management L.P. Announce Plans for a Global Strategic Alliance

Auburn Hills, Mich., Jan 20, 2009 -- Fiat S.p.A., Chrysler LLC (Chrysler) and Cerberus Capital Management L.P., the private investment majority owner of Chrysler LLC, announced today they have signed a non-binding term sheet to establish a global strategic alliance.

The alliance, to be a key element of Chrysler's viability plan, would provide Chrysler with access to competitive, fuel-efficient vehicle platforms, powertrain, and components to be produced at Chrysler manufacturing sites. Fiat would also provide distribution capabilities in key growth markets, as well as substantial cost savings opportunities. In addition, Fiat would provide management services supporting Chrysler's submission of a viability plan to the U.S. Treasury as required. Fiat has been very successful in executing its own restructuring over the past several years. The alliance would also allow Fiat Group and Chrysler to take advantage of each other's distribution networks and to optimize fully their respective manufacturing footprint and global supplier base.

The proposed alliance would be consistent with the terms and conditions of the U.S. Treasury financing to Chrysler. Per the U.S. Treasury loan agreement, each constituent will be asked to contribute to Chrysler's restructuring effort including: lenders, employees, the UAW, dealers, suppliers and Chrysler Financial. Such steps would greatly contribute to Chrysler's long term viability plan. Completion of the alliance is subject to due diligence and regulatory approvals, including the U.S. Treasury.

As a consideration for Fiat Group's contribution to the alliance of strategic assets, to include: product and platform sharing, including city and compact segment vehicles, to expand Chrysler's current product portfolio; technology sharing, including fuel efficient and environmentally friendly powertrain technologies; and access to additional markets, including distribution for Chrysler vehicles in markets outside of North America, Fiat would receive an initial 35 percent equity interest in Chrysler. The alliance does not contemplate that Fiat would make a cash investment in Chrysler or commit to funding Chrysler in the future.

"This initiative represents a key milestone in the rapidly changing landscape of the automotive sector and confirms Fiat and Chrysler commitment and determination to continue to play a significant role in this global process. The agreement will offer both companies opportunities to gain access to most relevant automotive markets with innovative and environmentally friendly product offering, a field in which Fiat is a recognized world leader while benefitting from additional cost synergies. The deal follows a number of targeted alliances and partnerships signed by the Fiat Group with leading carmakers and automotive suppliers over the last five years aimed at supporting the growth and volume aspirations of the partners involved," the CEO of Fiat Group, Sergio Marchionne said.

"A Chrysler/Fiat partnership is a great fit as it creates the potential for a powerful, new global competitor, offering Chrysler a number of strategic benefits , including access to products that compliment our current portfolio; a distribution network outside North America; and cost savings in design, engineering, manufacturing, purchasing and sales and marketing," said Bob Nardelli, Chairman and CEO of Chrysler LLC. "This transaction will enable Chrysler to offer a broader competitive line-up of vehicles for our dealers and customers that meet emissions and fuel efficiency standards, while adhering to conditions of the Government Loan . The partnership would also provide a return on investment for the American taxpayer by securing the long-term viability of Chrysler brands in the marketplace , sustaining future product and technology development for our country and building renewed consumer confidence, while preserving American jobs."

"This is great news for the UAW Chrysler team and we look forward to supporting and working with them to ensure Chrysler's long term viability," said Ron Gettelfinger, President United Auto Workers (UAW).

"We're on board with this important strategic initiative as it will help preserve the long-term viability of our great company, its brands and of course UAW-Chrysler jobs," said General Holiefield, Vice President, United Auto Workers (UAW).

About Chrysler LLC

Chrysler LLC, headquartered in Auburn Hills, Mich., produces Chrysler, Jeep®, Dodge and Mopar® brand vehicles and products. Total sales worldwide in 2008 were 2 million vehicles. Outside of North America, 2008 was the second-best sales year in the last decade and the third-best ever for Chrysler International. Chrysler LLC's product lineup features some of the world's most recognizable vehicles, including the Chrysler 300 and Town & Country, Jeep Wrangler and Grand Cherokee and Dodge Challenger and Ram. In the fall of 2008, Chrysler introduced three advanced electric-drive vehicle prototypes – the Dodge EV, Jeep EV and Chrysler EV. One is targeted to be produced in 2010 for consumers in North American markets, and European markets after 2010.

About Fiat

Founded in 1899, Fiat is an automotive-focused industrial group, serving customers in more than 190 countries around the world. With some 185,000 employees, 114 R&D centers and 178 plants worldwide, the Fiat Group designs, manufactures and sells passenger cars (Fiat, Lancia, Alfa Romeo, Abarth, Maserati and Ferrari), agricultural and construction equipment (CNH Case New Holland), trucks and industrial vehicles (Iveco), and automotive components (FPT Powertrain Technologies, Magneti Marelli and Teksid). More information available at www.fiatgroup.com or www.fiatgroupautomobilespress.com.

Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved

[Hokimjers]

Fiat has option to boost Chrysler stake: financial source

MILAN (AFP) – The Italian auto group Fiat, which has agreed to take 35 percent of Chrysler, has an option to increase its holding in the struggling US car maker to 55 percent, a financial source said on Wednesday.

"Fiat has an option to take 20 percent more (of Chrysler capital) over the next three years," the source told AFP, after a report to this effect in the Wall Street Journal.

Fiat declined to comment.

On Tuesday, Fiat and Chrysler announced a draft partnership agreement under which Fiat would obtain 35 percent of Chrysler in return for providing the US group with technology.

The agreement is expected to be completed in April and would need endorsement from the US government, which has just provided Chrysler with 5.5 billion dollars 4.2 billion euros) in rescue finance.

[expomeHattePe]

The new Dodge Challenger SRT-8 is one incredible, great looking car. I saw one the other day and it literally screamed, "Buy Me!"

[ArrereGarhync]

^ Chrysler's cars too often rely on their looks for customers: the 300, the Ram, the PT Cruiser, the Pacifica, the Crossfire, now this. Can they make a reliable car?

Can Fiat (of all companies!) rescue them?

[geasurpacerma]

According to MSNBC today, Chrysler has finally come to an agreement to merge with Fiat .

Press release:
Source: wsj.com via jalopnik.com
Fiat Group, Chrysler and Cerberus Announce Plans for a Global Strategic Alliance
Fiat S.p.A., Chrysler LLC (Chrysler) and Cerberus Capital Management L.P., the private investment majority owner of Chrysler LLC, announced today they have signed a non-binding term sheet to establish a global strategic alliance.
The alliance, to be a key element of Chrysler's viability plan, would provide Chrysler with access to competitive, fuel-efficient vehicle platforms, powertrain, and components to be produced at Chrysler manufacturing sites. Fiat would also provide distribution capabilities in key growth markets, as well as substantial cost savings opportunities. In addition, Fiat would provide management services supporting Chrysler's submission of a viability plan to the U.S. Treasury as required. Fiat has been very successful in executing its own restructuring over the past several years. The alliance would also allow Fiat Group and Chrysler to take advantage of each other's distribution networks and to optimize fully their respective manufacturing footprint and global supplier base.
The proposed alliance would be consistent with the terms and conditions of the U.S. Treasury financing to Chrysler. Per the U.S. Treasury loan agreement, each constituent will be asked to contribute to Chrysler's restructuring effort including: lenders, employees, the UAW, dealers, suppliers and Chrysler Financial. Such steps would greatly contribute to Chrysler's long term viability plan. Completion of the alliance is subject to due diligence and regulatory approvals, including the U.S. Treasury.
As a consideration for Fiat Group's contribution to the alliance of strategic assets, to include: product and platform sharing, including city and compact segment vehicles, to expand Chrysler's current product portfolio; technology sharing, including fuel efficient and environmentally friendly powertrain technologies; and access to additional markets, including distribution for Chrysler vehicles in markets outside of North America, Fiat would receive an initial 35 percent equity interest in Chrysler. The alliance does not contemplate that Fiat would make a cash investment in Chrysler or commit to funding Chrysler in the future.
"This initiative represents a key milestone in the rapidly changing landscape of the automotive sector and confirms Fiat and Chrysler commitment and determination to continue to play a significant role in this global process. The agreement will offer both companies opportunities to gain access to most relevant automotive markets with innovative and environmentally friendly product offering, a field in which Fiat is a recognized world leader while benefitting from additional cost synergies. The deal follows a number of targeted alliances and partnerships signed by the Fiat Group with leading carmakers and automotive suppliers over the last five years aimed at supporting the growth and volume aspirations of the partners involved," the CEO of Fiat Group, Sergio Marchionne said.
"A Chrysler/Fiat partnership is a great fit as it creates the potential for a powerful, new global competitor, offering Chrysler a number of strategic benefits, including access to products that compliment our current portfolio; a distribution network outside North America; and cost savings in design, engineering, manufacturing, purchasing and sales and marketing," said Bob Nardelli, Chairman and CEO of Chrysler LLC. "This transaction will enable Chrysler to offer a broader competitive line-up of vehicles for our dealers and customers that meet emissions and fuel efficiency standards, while adhering to conditions of the Government Loan. The partnership would also provide a return on investment for the American taxpayer by securing the long-term viability of Chrysler brands in the marketplace, sustaining future product and technology development for our country and building renewed consumer confidence, while preserving American jobs."
"This is great news for the UAW Chrysler team and we look forward to supporting and working with them to ensure Chrysler's long term viability," said Ron Gettelfinger, President United Auto Workers (UAW).
"We're on board with this important strategic initiative as it will help preserve the long-term viability of our great company, its brands and of course UAW-Chrysler jobs," said General Holiefield, Vice President, United Auto Workers (UAW).

[exsmoker]

This would appear to be good news. Now I can start some serious number-crunching to see if I can afford to buy (if not operate) a spanking-new 2009 Dodge Challenger SRT-8! Off to see the Dodge Boys this weekend!

[M1zdL0hh]

The Chrysler Building now the Fiat Building.

[Knillagrarp]

Hmmm, I don't like the ring of that ... let's make it the Maserati Building.

[Âåðåùàãèí]

Via archidose:
Sunday, May 03, 2009
Shopping Mall or Corporate Headquarters?

From above this large complex, marked by a T-shaped skylit building, looks like it could be a shopping mall, especially with the numerous parking lots. But could it be a corporate headquarters, similar in scale to a shopping mall?



Here's the answer, from Business Week:
"When the [headquarters] building was erected in the early 1990s, it was designed so it could be repurposed into a shopping mall without too much modification if the perennially troubled Chrysler should go out of business."(Heard on this week's episode of Wait, Wait, Don't Tell Me.)

posted by John @ 12:00 PM

[__CVineXPharm__]

No way! I was just looking at their HQ on Gmaps a few weeks ago, and it really jumps out at you how much it looks like it could be a mall. I wonder whether the architects sold that idea to the client, or vice versa.

Either way, that kind of, err, provision doesn't exactly inspire confidence in the company's future!

[ZonaPutaX]

What's more emblematic of the US car industry than planned obsolescence?