The "Good" Chrysler Thread: Making Vanilla, Vanilla

[YSSMAN]

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Hold Onto Your Butts Kids, This One is a Big One...​

You can read the origional story from the New York Times here, otherwise, here is the short-story:

According to a report by Bill Vlasic and Andrew Ross Sorkin that went live moments ago on the New York Times website, Chrysler and GM have been in merger talks for the last month. As of today, it's a "50-50" shot that it'll happen. While we've been talking about talks between the two companies for over a year — specifically on trucks — this is something entirely different. We'll have more shortly — CNBC just called and asked us to jump on the phone for a moment to discuss on air. UPDATE:According to Sorkin on CNBC moments ago, the terms of the deal currently being worked out would have Cerberus end up owning a major stake in the combined firm. So sorry Cerberus, you won't be getting your fat fully out of the automotive fire just yet!

Keep in mind as well that Chrysler has been in talks with FIAT SpA in the past as well as current proceedings with Nissan-Renault.

As a GM fan, I'd vote no on this deal 110%. Certainly it would dramatically increase your overall percentage of the market, and in the end, make you larger than Toyota... But thats not the point. Profitability and a continued effort to produce good products that people actually want to buy can't happen until Chrysler changes their own game. Certainly, there could be a good bit of positive things to come out of shared R&D, but between the product overlap and otherwise having too many kids in the corporate pool... I don't feel good about it.

That being said, I'm still for the Nissan-Renault-Chrysler deal. There are far more things to be gained on either side of that deal, and furthermore, it gives us that much better of a chance of getting Renaults in the US (again).

UPDATE:

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Apparently there are a bunch more people looking to buy/partner-up with Chrysler...

 

[Joey D]

Sooooo where is GM going to get this money for the buy out? If it's coming from the $25 billion I will be even more pissed at the American automotive industry then I already am. That money is supposed to be used to develop more fuel efficient cars and switch over plants.

I see no point in all of this though, everything GM makes is better than a Chrysler product in the same market segment. Plus as I've said they don't have the money to buy out Chrysler. GM needs to focus on promoting the hell out of the Volt and bringing other cars to the market which are a quality product and fuel efficient.

Although at this point anything is possible, I don't really need any more convincing that a prerequisite to be a top level person in a major company is to be an idiot.

 

[V1P3R]

So much for quality getting better.

 

[McLaren]

Blasphemy. The Viper & the Corvette alone would cause problems being held by the same owner. Let Cerberus continue work with Chrysler.

 

[YSSMAN]

Sooooo where is GM going to get this money for the buy out?

Thats what I'm unsure of. GM apparently has only $21BN left in the bank and is reportedly spending nearly $1BN a month on operating costs (no word on how much is taken down by sales and such), I have no idea where that cash will come from. It was suggested on CNBC this evening that Cerberus (the owner of 80.1% of Chrysler) would be buying into GM while they buy into Chrysler (presumably picking up Daimler's 19.9% of the company + whatever else) in a "fair trade."

That, or its just a simple working agreement.

Keep in mind that GM and Chrysler have worked together with stuff before, so, who knows. Again, keep in mind as well that Nissan-Renault are already in some agreements with Chrysler as well.

Its the statement that the possibility is "50-50" that scares me. Lets hope someone at GM has enough sense to make sure Chrysler goes to the French/Japanese on this one...

 

[a6m5]

Sooooo where is GM going to get this money for the buy out?

Maybe I'm reading this wrong, but doesn't this say that GM is actually the one that's getting bought out?

the terms of the deal currently being worked out would have Cerberus end up owning a major stake in the combined firm.

And if it is actually the General Motors buying into Chrysler, where is the merit in doing that? GM, along with many other major automobile manufacturers are struggling to get by. Why would GM want to pay into acquiring more financial headaches?

I got more questions than answers. What kind of shape is Cerberus in? What is driving them to this "merger"? Are they in trouble themselves? A push, a nudge from the government, or another source? A smart, longterm investment? I just got up, I'm surprised by the news, was little scared by it.

Edit: OK, this explains a lot:

The talks between GM and Cerberus, first reported by the New York Times and the Wall Street Journal, began more than a month ago and are not certain to produce a deal.

The Journal said that Cerberus had proposed a swap of assets with GM that would give the private equity firm full ownership of finance company GMAC.

In exchange, GM would get the loss-making auto operations of Chrysler, the newspaper said.

Cerberus currently owns 51 percent of GMAC, GM's former captive finance company which has been hobbled by its exposure to the U.S. mortgage market. GM owns the remainder of GMAC.

 

[V1P3R]

Blasphemy. The Viper & the Corvette alone would cause problems being held by the same owner.

Was tryin not to think about that too... although, Lutz the traitor is already there so it was headed that way anyway.

 

[Sniffs]

NO! nononononononoNO!

that's an insult both to GM and Chrysler! no guy wants to see mopars or chevys wearing each other's badge! that'd also mean losing what's left of their ownership of Mitsubishi to GM...and you can say bye-bye to any performance whatsoever!

I would rather see renault/Nissan pick up GM, trim the fat, and stuff us full of hot hatches again! *shudders at the thought of the Return of the Chevette*, OR grab Chrysler from cerberus and do a better job than (i hate to say it) MB did. mercedes, you shouldna treated Chrysler like a bag of doggie doo and held it at arms length. you shoulda helped us fix it.

and, whatever you people do,
LEAVE JEEP® the hockey sticks ALONE

 

[Jim Prower]

Only advantage I see is adding dealers for GM vehicles to the network: in other words, good 'ol Corporate Raiding. Otherwise, pretty stupid idea.

 

[Tornado]

Unlike the Renault-Chrysler funnies from a few months ago, this isn't even funny in an ironic sense. GM can gain nothing from holding Chrysler's assets. Period.
So I've thought about this, and the only situation that this would make any sense is the following:
GM buys out Chrysler, collects the extra government money that would have gone to Chrysler, dismantles Chrysler, sells off everything but Jeep. Pockets the bailout money and the money gained from selling off Chrysler's assets.
Or, I guess what Jim said above, in layman's terms.

 

[Philly]

I saw this pop up on Autoblog yesterday and had a little look into it and I guess the answer is a general "it ain't happening" from around the web.

Unlike the Renault-Chrysler funnies from a few months ago, this isn't even funny in an ironic sense. GM can gain nothing from holding Chrysler's assets. Period.

I believe GM could use a decent minivan platform, and they would have a much bigger stake in the electric car market between the Volt and the new Chrysler EVs. Although Chrysler would have a fair bit to gain from it.

GM buys out Chrysler, collects the extra government money that would have gone to Chrysler, dismantles Chrysler, sells off everything but Jeep. Pockets the bailout money and the money gained from selling off Chrysler's assets.

And then there's that. I guess the chances of both automakers making it out of this funk are pretty low, so teaming up could help the chances of pulling through. I'd rather see both make it through as one company than one of them fall off the face of the earth.

Big day for auto news...

 

[YSSMAN]

Unlike the Renault-Chrysler funnies from a few months ago, this isn't even funny in an ironic sense. GM can gain nothing from holding Chrysler's assets. Period.

GM knows it, their fanbase knows it, hell even the Mopar people know it. The Nissan-Renault deal is still on the table, and I'll take my bets that it will happen well before a GM deal ever would.

GM would have a far better time merging with its polar opposite, Ford, at this point. At least we know they can build nice cars...

 

[Philly]

It looks like on the Chrysler buying GM side, Chrysler is looking to become the owner of the GMAC financing company, which is a big gamble that would have massive benefits if won.

 

[Touring Mars]

What would the new company be called, General Chrysis?

 

[Pupik]

What would the new company be called, General Chrysis?

...or GMCC.

I figure this merger is more about GM taking away the 10-20% market share (I don't know the exact figure) that Cerberus/Chrysler has left in the US auto market. I can't imagine GM getting bigger and better by acquiring more brands. It nearly killed GM in the 1920s.

They can say they created the minivan, post-merger!

 

[Joey D]

Looks like GM and Ford were talking at first.

Ford not interested in GM tie-up
Written by Bryce G. Hoffman

General Motors Corp. approached Ford Motor Co. about a possible merger prior to contacting Chrysler LLC, according people close to the situation.

Though there were direct communications between GM CEO Rick Wagoner and Ford CEO Alan Mulally, those talks never evolved into actual negotiations.

"There were never in-depth, substantive discussions that went on," said one of those sources, who spoke to The Detroit News on the condition of anonymity. "It was more an expression of interest, as in, 'Do you want to talk?' "

Ford said no.

The Dearborn automaker would not officially comment on the reports, but sources familiar with Mulally's thinking on the topic told The News that such a tie-up would be contrary to his plan for saving Ford.

Mulally wants to simplify Ford's own operations and better integrate them on global scale. He wants fewer brands and fewer dealers. And he is jealously guarding Ford's cash reserves, which have so far insulated the Dearborn automaker from the bankruptcy speculation swirling around GM.

Adding more brands, more factories and more dealers just does not make sense in this environment, those sources said.

Mulally has repeatedly pointed to rival Toyota Motor Corp. as his model for success, noting that Japan's largest automaker competes successfully around the world with just one major brand and closely integrated global operations.

Reports that GM had contacted Ford first surfaced in the New York Times earlier today.

Ford contacted GM two years ago to discuss the idea of merging some elements of their operations, such as purchasing and information technology, but those talks never panned out.

As The News first reported in August, GM contacted Ford this summer to discuss possible collaborations on powertrains, vehicle architectures and other areas. The two companies have had several meetings to discuss the joint development of engine technologies, but have so far nor reached any concrete agreement.

What in the world is going on in the automotive industry?

 

[McLaren]

I'm pretty sure Ford has zero interest in completely merging with anyone other than, say, Ferrari....

 

[YSSMAN]

Ford left the table, I assume, because they know it is going to be cheaper and likely easier to just merge the European models all into the North American market. We've also got to remember that Ford has three brands in the US under direct operation of the Blue Oval (I'm not counting Mazda and Volvo) while GM has eight. GM says they're doing the same thing as Ford, integrating their European and Asian products here... But they've got more hoops to jump through.

What its coming down to, I think, is survival. Chrysler is dead in the water, we already know it. GM is worried that the end can come sooner than later. What I don't understand is how I'm getting conflicting reports on what GM wants. They tell the GM folks that they "aren't worried about Toyota, let them have the market share and sales" and yet they do something like this that clearly is against that statement...

Again, I don't think it'll go through. Given what you see over on GMI, it seems very likely that it won't go through. Nevertheless, the market is very different now than it was even a year ago.

 

[Tornado]

We've also got to remember that Ford has three brands in the US under direct operation of the Blue Oval (I'm not counting Mazda and Volvo) while GM has eight.

30 seconds with a sharpie would bring that down to 4 without losing nearly any sales.

 

[Philly]

What in the world is going on in the automotive industry?

That all is kinda confusing stuff. I think what it comes down to on that is that Ford currently has the edge on survival later, and cooperation with other companies either wouldn't benefit them (due to them already having a future with their European models) or would pull them down because they would be putting money into something that isn't going to help them.

Although what I think we might be seeing as a trend in the near future is more cooperation between rival companies on platforms and drive trains. Between the BMW/Mercedes talks and all the mumbo-jumbo going on in the States, it seems like something like that will come from it all.

 

[YSSMAN]

Big update on the top, but here is the summary:

Bob Nardelli, Chrysler's current CEO, has given his employees the closest thing to an admission as we are likely to see that the company has been in serious negotiations with other automakers regarding future product plans and possibly even mergers. As has been widely reported over the weekend, Chrysler has apparently had discussions with General Motors regarding a tie-up between the two automakers, and the rumormill is churning away with stories that GM isn't the only suitor. Carlos Ghosn already has a history of merging automakers, and his Nissan/Renault partnership has naturally been recalled as a possible mate with Chrysler, as have Fiat and Tata Motors.

Remember that there's nothing concrete here to report, just speculation. At this point, all we know is that Nardelli admits that there are "third parties who are interested in exploring future possibilities with Chrysler" and that "as the company evaluates strategic options to maximize core operations and leverage its assets, we engage in a dialogue with these parties." Sounds pretty vague, wouldn't you say? These talks can be routine or they could be much more. We'll just have to keep an interested eye on the news.

Talk about the automotive apocalypse in Detroit...

Hey, as long as GM isn't buying, I don't care.

 

[Omnis]

Maybe TATA can sort them out. My aunt wants a Nano soooo badly.

 

[Sniffs]

PARDON??! now FIAT S.p.A and Tata want a piece?!

i think i'd rather see Dodge and Chrysler sink into Oblivion!

the choice is the giant waffle (Renault/Nissan), guys who can't read the US market right outside of supercars (Fiat), or an untested NoOb(in the US, anyways) that need to practice with LR first (Tata).

nonoNO!

a note to any automotive execs, etc reading this, and for the Polyphony staff to pass on at the next licencing session: DON'T screw this up. and leave JEEP alone

 

[Mt. Lynx]

Personally, I´d like GM to keep their fingers away from Chrysler. I´d rather have Chrysler dead in the water tbh, and have them sell off their own subcompanies, such as Jeep, to other manufacturers. Jeep to GM, Dodge to Renault/Nissan, and frankly, I couldn´t care less about things like Eagle...

 

[Joey D]

Eagle hasn't been around since 1998.

 

[Bones Brigade]

Bring back the Talon.

 

[Tornado]

As there is no more DSM, or Eagle, that is unlikely.

I vote Fiat, as i means Fiat would have an in place distribution network.

 

[Mt. Lynx]

Eagle hasn't been around since 1998.

I´m not surprised I didn´t know that! Chrysler has never really caught my attention with anything, except maybe the ME Four-Twelve concept...
And wasn´t the Talon a Mitsubishi in disguise?

What happened to Plymouth? Was it ever resurrected?

About the FIAT idea; sounds like a plan to me. Did Alfa ever start their distrubution?

 

[YSSMAN]

I vote Fiat, as i means Fiat would have an in place distribution network.

Thats what I'd be hoping for as well. If they buy into Chrysler, they get to have their plants here in the US to expand their manufacturing operations, it gives them a dealer network to use for Alfa Romeo/FIAT (assuming the BMW-MINI deal doesn't go through...), and in the end it may be a decent low-end place to start your eventual growth in the American small-car market.

Only problem is that Nissan-Renault wants the same thing (manufacturing capacity), and truth be told, to some extent I have a hard time deciding whether or not I'd rather have FIAT or Renault in some respects. The 500 and Punto are great, but I really like the Clio and the Mengane III too.

 

[Philly]

How do we know that TATA and FIAT are in the talks? Or did Autoblog just pick two automakers out of the sky?

Would all this turn out into something like the deal Diamler had with Chrysler back in the day? Hopefully that wouldn't throw Chrysler back down the drain.