Wednesday, February 21, 2007

Chrysler: Let the Fire-Sale Games Begin

DETROIT — Prospective bidders already have begun jockeying for position as German auto giant DaimlerChrysler prepares to spin off or sell the struggling Chrysler Group.

2007 chrysler 300
Rumors began flying on both sides of the Atlantic — and the Pacific — almost immediately after CEO Dieter Zetsche on Thursday confirmed the company was exploring "all options" regarding Chrysler.

Several media reports in Europe said Zetsche met in December with General Motors Chairman Rick Wagoner and discussed a wide range of scenarios, including the possibility of joint vehicle development. But the likelihood that GM will actually buy Chrysler seemed dim, considering how much product overlap exists between the two companies, GM's own brand-management issues and how much excess baggage Chrysler would bring to the party, from underused assembly plants to the same kinds of "legacy" health care and pension costs that still plague GM.
On Friday, the Times of London reported that Korean automaker Hyundai also was interested in buying Chrysler, ostensibly to get access to its U.S. dealer network — a notion that was quickly and officially scotched by Hyundai. Other follow-up media reports speculated that Hyundai, which operates a joint engine-manufacturing facility in Michigan with Chrysler and Mitsubishi, might also be interested in full-size Dodge pickup trucks and SUVs, as well as the Jeep brand. Most of those reports failed to add that sales of Dodge trucks and Jeep vehicles have stumbled badly in the past year.

Other reports have paired Chrysler with European automakers PSA and Fiat, both of which pulled out of the U.S. market years ago. Neither company is considered a strong suitor.

DaimlerChrysler has yet to put a price on its ailing U.S. subsidiary, which it acquired in a controversial 1998 takeover. Analysts say the potential selling price could range from $6 billion to $12 billion, but at least one insider suggested the German parent might have to offer a "fire sale" deal to get Chrysler off its books, much as BMW was forced to do with Rover in 2000.

© Source: article on insideline
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