The FT has some valuable perspective on Chrysler owners, Cerberus, the private equity firm that accepted multiple billions in taxpayer “loans” yet refuses to list the automaker’s backers. Hey, does owner Steven Feinberg hold any paper personally? Anyway, Mr. F is nonplussed by the fact that Chrysler is now on federally-funded life support begging for more. “We always try to hang in—but not at the expense of being commercial. As far as GMAC and Chrysler are concerned, we will hang in there as long as it takes. There is the feeling of a greater calling.” When did running a once-proud American company into the ground become a sacred ceremony? Anyway, there’s only so much spiritual elevation an investor can take. Know what I mean? No? Make the jump.
Such sentiments may be dubious comfort to investors. More reassuring is the fact the combined weighting of GMAC and Chrysler in Cerberus’s portfolio, originally 12 per cent of total assets under management, now represents only about 7 per cent. “They are less exposed than everyone thinks,” says Mark Epley, who is responsible for the relations with private equity firms at Deutsche Bank. “They are diversified. Nothing kills them.”
There’s plenty more about Feinberg’s strategy. But pistonheads will savor this.
Friends say formerly Mr Feinberg would criticise acquaintances for buying foreign cars, but he is now likely to lecture them for an hour on the subject. He has only ever driven US-made vehicles, with a preference for trucks. Immediately after buying control of Chrysler, he switched from the GM and Ford trucks he owned to a Chrysler-built Ram. He says it is the best truck he has ever owned.
Feinberg must have gotten one of those tricked-up press fleet Rams.
superbadd75
Why WOULDN’T he?
This clown and that bald-headed buzzard John Snow who chairs Cerberus are absolutely endemic to what is wrong with big business in the U.S.; it’s a real, “Screw you, I got mine” mentality.
absolutely endemic to what is wrong with big business in the U.S.; it’s a real, “Screw you, I got mine” mentality.
No offense, rpol35, but isn’t that the capitalist way?
The ironic thing about the free-market people’s championship of the “invisible hand” is they completely take it out context in which Adam Smith originally used it in the Wealth of Nations.
Smith said that governments needed to step in to lightly regulate to keep cartels and oligopoly from rigging the markets so you could then have a free market and let the invisible hand work. The invisible hand only comes into play when you regulate markets to keep them open and un-riged.
How many people in the United States of America even know what Cerberus is? Or what Robeco is? Cerberus take the money and run – I think that might have been their plan all along, yet the market crashed earlier than they thought. Chrysler is such an epic mess at this point. NONE of their vehicles were recommended by Consumer Reports, not even one.
The real questions:
Should taxpayers fund Cerberus?
Why do taxpayers have to fund Cerberus?
@ No offense, rpol35, but isn’t that the capitalist way?
Stewart – No offense taken but the problem is that this irresponsibility creates banking meltdowns and car manufacturer collapses et al as we are currently experiencing and then we, the taxpayer, many of whom are unemployed due to this corporcratic gluttony are stuck with the bill. I believe it is more criminal than capitalistic.
rpol35…Oh, I think what they have done is damnable, but is it seriously legally actionable (as opposed to anyone-can-start-a-lawsuit)?
I’m not snarking, I’m trying to get at a short and long term solution to this problem: Were laws broken in major way or not? If not, we need to change the laws.
And, of course, we need to change business so it isn’t such a race-to-the-bottom, beggar-thy-neighbor, devil-take-the-hindmost propostion (and proud of it).
@Stewart Dean, rpol35: One of the smartest profs I had for $-related courses used to say ~this:
“A cop catches this crook trying to rob a bank. The cop says,’Why were you there trying to rob it?’ The bank robber says,’Because banks are where the money is.\'”
—
(in other words, no matter what the efforts of all the legions of good guys are, the job attracts the man, and there will always be crooks trying to get into ~finance jobs.)
—
(he also regularly likened these guys to the Biblical Money-Changers)
Senior Feinberg, the Dodge Ram is made in Saltillo, Coahuila, Mexico.
And we all know that Cerberus bought Chrysler with the mid-to-long term plan to stop Chrysler’s production of vehicles and simply make Chrysler a distributor of rebadged Mexican and Asian cars, with the primary profit coming from the financing of those cars.
So please, Senior Feinberg, take off the flag, and take some advice from Chuck Grassley.
no_slushbox :
Senior Feinberg, the Dodge Ram is made in Saltillo, Coahuila, Mexico.
He probably implied, as most do who “buy American” is that the profits end up in an American company…not where it was built or where each part that goes in a vehicle comes from. Simply – follow the money – and too bad more people don’t quite frankly.
TheFredMan:
The quote is “He has only ever driven US-made vehicles.”
But, in regard to your point:
Chrysler is not profitable. When a US company loses money on something made in Mexico then, net, the US loses money.
Also, it is quite assumptive for you to claim that Chrysler is a “US” company.
I know that Daimler, a German company, still owns 19.9% of Chrysler. Do you know the nationality of the investors that own the other 80.1%?
I know that Daimler, a German company, still owns 19.9% of Chrysler. Do you know the nationality of the investors that own the other 80.1%?
It’s worse than that. Many Americans own shares of Daimler — I do. I own shares of Toyota also. Multinational companies are a strange breed.
no_slushbox :
Read the FT article perhaps too quickly…I was referencing the comment that he criticizes those who buy “foreign” cars, I glossed over the US-made reference. I also understand that losses follow the same path as profits – but thanks.
I do not know the nationality of the investment base…no more than I would know the nationality of the shareholders (investors) of any other auto company. Too much emphasis here, and elsewhere, on that topic IMO anyway.
tesla deathwatcher:
Yeah, I completely agree, my point was to critique Feinberg’s comments.
Not that Feinberg believes what he says, it’s just what he needs to say to keep the bailouts running to his embarrassing Chrysler, and more importantly, Chrysler Financial and GMAC investments.
I’ve often told people worried about the US to buy Toyota stock, not “domestic” cars.
TheFredMan:
My bad, I think I may have read your comment to quickly.
no_slushbox :
Senior Feinberg, the Dodge Ram is made in Saltillo, Coahuila, Mexico
It’s also made in St. Louis, MO and Warren, MI. The only Rams built in Mexico are the 3/4 ton models and above (i.e. 1 tons and Chassis Cabs). Chances are Feinberg drives a 1/2 ton pickup and all of those are made in the United States. Please get your facts straight before spreading mis-information or charging up people’s emotions.
no_slushbox:
“Senior Feinberg, the Dodge Ram is made in Saltillo, Coahuila, Mexico.”
The majority of Rams are made in Warren, Michigan. The Saltillo Rams are primarily for export to the South American market. Chrysler has two assembly plants and an engine plant in Mexico. They have 30 installations in N.A. And Ford makes Fusions in Hermosillo. Why do so many here think the D3 make ALL their vehicles in Mexico? Bad enough they think they make MOST of them there. I mean it’s not hard to look this stuff up.
Wheeljack:
What are these emotional people going to do? Not buy a Chysler? Chysler sells the wost cars of any company in this country, so they can thank me later.
The facts are that Cerberus took on Chysler to gut the company and turn it into a company that simply distributes and finances foreign cars, building nothing.
Now that Chysler has become insolvent Cerberus is wrapping itself in the flag, when Cerberus does not care at all about America.
Right now Cerberus just wants the government to keep funding Chysler long enough that Cerberus can sell Chysler to China or Fiat so that Cerberus doesn’t have to deal with the embarasment of filing a bankruptcy.
If they cared about America they would would not be trying to give half the company to Fiat, which will make Chysler more than 55% foreign owned.
But hey, if the private equity front men have got you fooled convinced about their intentions that’s fine, send them a check, just please leave me out of it.
And buy some Toyota or Honda stock so that there can be more American ownership of automotive companies that are run by people that actually have a sense of honor and shame.
no_slushbox,
First off, 35% is not a majority stake. Yes with Dumbler it will 54.1%, but trust me, as soon as Chrylser is worth a plugged nickel, they will sell their share of the company, because they no longer have the ability to drain funds out of it. Will they sell it to Cerberus, FIAT or someone else? Who knows.
Second, you don’t know what Cerberus’ original plans were. In the beginning everyone said strip-n-flip, but that never happend. The flip would have been hard, due to the economy tanking, but the strip, the easy part, never happened either. As for distributing and financing foreign cars, if that were the case why did they develop the new CUV, Minivans, the Ram, and the upcoming Grand Cherokee/Durango (at a cost of billions)? The only thing we KNOW for sure is that they wanted to contract out an A and B segment car, with the possibility of co-developing a C segment car. That’s it. The large cars, vans, SUV’s, CUV’s, and trucks are done in house. And the VW Routan and the almost Nissan Titan show that Cerberus was thinking in the opposite direction – they have tried to design and make vehicles for foreign automakers.
It seems to me that Cerberus played to Chrysler’s strengths while looking for outside allies to help with their weaknesses. Exactly what an investment group like Cerberus is supposed to do. Imagine that.
windswords:
Yes, greater than 50% is a majority, good job. Daimler still does own the interest, no matter what you assume they will do in the future.
Everyone knows that Cerberus wanted vehicle financing, not vehicles. That’s why they bought GMAC. That’s why they’ve been trying really hard to import Chinese cars like Chery. They had to buy Chrysler to get Chrysler financial.
But hey, if you don’t think Cerberus is a corrupt parasite good for you. With your financial sense taxpayers are probably bailing out your defaulted ARM also, so I can see how you empathize with Cerberus.
An investment group is not supposed to buy troubled companies that it has no experience running and put the last nail in the coffin.
An investment is supposed to go bankrupt when it fails, not live off the government. I wish we had a government where I could imagine that.
no_slushbox,
Tsk, tsk, tsk. Sorry to disapoint you, but I own my house free and clear. My rental property is financed (with an ARM), but I have never been late.
You can hate on Cerberus all you want, but like any hedge fun, their supposed to make money for their clients. They saw value in certain auto companies (not just Chrysler) as well as their financial arms. Would they like to get rid of Chrysler now? Sure. So would Dumbler. But to say it was part of some grand scheme from the beginning like these guys are some kind of illuminati cabal is conspiracy theory tin-foil hat stuff. I don’t blame them for taking gubment money. I would too under the circumstances. I blame the gubment for offering it, with strings, but not enforcing those strings.
no_slushbox,
You can take the vitriol down a notch. My only point was that making an inflammatory statment about how Feinberg cries “buy American” but drives a vehicle only made in a Mexican plant was flat out wrong.
Since it seems most import car fanboys (like practically everyone on this site) out here on the net tend to believe only the negative information about the domestic automakers, please get your facts straight instead of adding to the misinformation…is that really that hard to understand? Since you seem to think a lot about acting in an honorable manner, why can’t you exercise some honor yourself and simply admit you were wrong?
While we don’t know what model Ram Feinberg drives, the fact remains that it could be one of the U.S. made light duty models, or it may not be if it’s a heavy duty model….period. You were wrong…this had nothing to do with liking or believing in Cerberus and their claims or not.
no-slushbox,
I know many on this site share your belief that “Chrysler sells the worst cars of any company in this country”, but have you driven the new Ram? I’m guessing not. I drove it at one of those “Ram Challenge” events and let me tell you, it blew away the competition, including the tacky Tundra with it’s bizarre and ugly interior.
Also, as long as you stay away from the 2.7L rental specials, the Charger and 300 are nice driving cars. Yes the interior is plain and some people feel cheap looking. My opinion is that the problem with the 300/Charger interiors lies with the choice of material grain/sheen more than anything else – they actually have a soft touch dash and door trim panels, it’s just that have an odd inorganic grain pattern and sheen that makes them look cheaper than they actually are.
My parents actually own a 3.5L 300 Limited with the 5-speed Mercedes automatic and they really like the car. It’s been trouble free (believe it or not) and it gets amazing mileage on the highway for the size of car it is (29-30 mpg when driving the speed limit, as my folks always do).
The bottom line is that there are plenty of people out there who like Chrysler products and have had good experiences with them. I believe it is a sign of an elitist mentality to deride people who like domestic automobiles by assuming they must be “less intelligent” for doing so, which is common theme I’ve outright read or gotten by implication in comments from readers here.