TTAC's Deep Throat tells us what common sense has suggested right from the start of Cerberus' involvement in Chrysler: the private equity firm has no intention of hanging onto Chrysler ten minutes longer than it takes to arrange a profitable transfer of ownership. "It’s going to take a mountain of cash to turnaround Chrysler– with no guarantees of success," DT emails. "The last thing Cerberus wants to do is pour money into the car business. Think about all the pieces in the deal… Why is Bernhard gone? Why hire Nardelli, unless Cerberus wants to marshal cash by having a strict numbers guy run the place? And don’t forget that the banks control Chrysler, not Cerberus – they’re holding $10 billion in loans." So? "Cerberus will sell Chrysler to GM in exchange for the rest of GMAC, or they’ll sell it to the Chinese who are much better capitalized than GM and can afford a 50 year view." Remember: you heard it here first.
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And a mountain of cash is just what is evaporating away from all of the stock markets in the world – right now.
It doesn’t take a brain surgeon to realize what this means to the 2.8. Soon to be the Detroit Zero, if things go as badly as they possibly could.
If GM or the Chinese had a higher bid for the company, Daimler would have sold it to them. Doesn’t make sense. In a couple of years, when Chrysler’s #’s improve courtesy of the product cycle, maybe. But not in a period of months.
Well, it will certainly be down to the Big 2 in short order. But I fail to see why GM would buy Chrysler. Just imagine the logistics of brands, dealers, and all that moribund metal. Magna of the Chinese maybe.
Why, GM has lots of experience managing a palette of brands! What’s the problem?
I’m sure one of the Chinese automakers would pay nicely for Chrysler’s dealer network. I always thought Cerberus was going down that path, they aren’t exactly in the restoration business.
Maybe FIAT (with ex-GM money) and Chery would be interested in a 50/50 JV “ChryslerJeep Corporation”.
They could combine UAW production expenses, UAW quality (?!) and legacy costs with –
FIAT rustproofing and electrical systems –
and Chery crash-worthiness.
Wow, sounds like a weiner, to me.
http://www.autosavant.net/2007/08/cherys-turn-to-fail-crash-test.html
Oh I’m sorry, I forgot to mention an overly bloated and largely non-responsive (to customer concerns) dealer network!
You know, the icing on the (poisonous) cake.
Nardelli will intimidate, slash, and burn to produce several profitable quarters. Wall Street’s pump and dump con men will issue an IPO. The moneychangers will reap their profit. Two or three years will do it.
Chrysler will crash a year or so after that. The rubes will be screwed, blued and tatooed.
Selling to GM might make regulators nervous from an antitrust perspective. (Such concerns would be misplaced, but “regulatory approval” would be a lingering cloud over any deal for a long time.)
Also, Deep Throat continues his transformation from someone inside GM who chose to break ranks with the “official party line” in order to expose the truth into just another industry pundit with a catchy handle.
Exactly, starlightmica! Just think: if GM has 22 percent of the market with eight brands, just think how many more cars they could sell with three more! Two budget brands, three truck-only brands, one alleged performance brand, a handful of mid-market brands, and Cadillac on top of it all. It makes perfect sense.
Nardelli will intimidate, slash, and burn to produce several profitable quarters. Wall Street’s pump and dump con men will issue an IPO. The moneychangers will reap their profit. Two or three years will do it.
Very sell said, Gardiner. It amazing how this racket goes unchecked.
Sajeev, the Wall Street gang are getting a wake-up call right now, though, aren’t they?
In reality, the average person on the street needs to think again about gambling (commonly thought of as “investing”) money/their retirement plan (which is soon to become “Welcome to Wal-Mart”)with these bingo-the-evil-clowns who have had their way since, oh about 1913 when the “fed” came about.
Look at the value of a (real) dollar since then – down about 98%.
For that matter, really educate yourself and read the Constitution of the United States where it specifies that currency is the dollar; that a dollar is silver; that the only legal currency to be used within the states is said dollar.
We’ve been had.
A probable casualty of this latest “egg laid by Wall Street” (to paraphrase a 1929 headline) will be that the Detroit 2.8 will end up in automotive boot hill, along side Packard, Studebaker, Rambler, Kaiser, Frazer, Tucker and thousands of others.
Well, isn’t this special?
http://www.leftlanenews.com/chrylser-to-expand-globally.html#more-5490
For that matter, really educate yourself and read the Constitution of the United States where it specifies that currency is the dollar; that a dollar is silver; that the only legal currency to be used within the states is said dollar.
Feel free to identify the sections where it says these things. I did a search of the text, and from what I can tell, the word “dollar” appears exactly once (discussing immigration fees), as does the word “silver” (placing limitations on the individual states, not the federal government).
Also, “silver” appears right after “gold,” which makes me wonder why you think silver is the only legitimate currency base, and the word “currency” does not appear at all. “Money” appears several times, but I don’t see anything in those places supporting your claim.
Cerberus Execs are agents of the Central Bankers…Look at the Org. Chart. They will try to turn Chrysler around as a global company and then sell when it becomes profitable to do so.
Interesting!
GM will not buy Chrysler. Saddling oneself with another operation that is losing money on every unit sold is not an appealing business prospect. Trading the remainder of GMAC for Chrysler would rank as one of the dumbest business decisions ever by an auto manufacturer.
I’m hard pressed, especially with high fuel prices and credit market contraction, to figure out how Cerberus is going to make money off this transaction.
To paraphrase a Gregory Peck character: Nardelli is playing god with other people’s money…
starlightmica:
August 10th, 2007 at 10:25 am
Why, GM has lots of experience managing a palette of brands! What’s the problem?
If by “managing” you mean “screwing up” I’m in total agreement with you.
Here’s a quote from the FT of August 6th that indicates Cerberus are looking at a 3 year timeline to flip Chrysler.
I doubt someone like Nardelli would commit to a project for longer than that anyway.
“In an interview with the Financial Times, John Snow, the former US Treasury secretary who chairs Cerberus, predicted a swift improvement. “I think you’ll see that Chrysler will be in much better shape within three years. This is a plan to get it back to profitability,” he said.”
Holy smokes. If GM bought Chrysler or even if a auto company in China bought them… that would be big news indeed. I think someone in China with deep pockets will be the likely buyer.
If Chery buys Chrysler, it could give a new meaning to the “Imperial” model…
China has cash to spare. Today they reported a trade surplus of $24.36B for the MONTH of June. Over $24B more cash went into China in June than came back out. That is serious money. A couple of weeks worth of China’s positive cash flow is enough to buy Chrysler if they want it.
Remember that in China most of the large companies are government owned, so the Chinese government basically does whatever it wants and moves big piles of money around at will.
Of course GM will buy Chrysler. And Ford. You can never have too many brands. True, they’ll lose money on each car sold. But it’s the volume that keeps them in business!
Coming: the re-launch of Oakland, LaSalle, Edsel, DeSoto, Plymouth, Maxwell …
The New York Times confirms one aspect of Deep Throat’s thesis: that the banks are calling the tune.
“Cerberus has declined comment on reports that bankers pressured the company to hire an outside executive, instead of leaving Mr. LaSorda in place. He is now number two to Mr. Nardelli.”