The Detroit Bureau reports today that in a bankruptcy court document, CEO Robert Nardelli stated that Chrysler LLC offered for sale the Detroit Viper factory (and presumably the tooling and intellectual property to go along with it) for a mere $10 million dollars. The factory has been up for sale since this past August, but sadly there was “no purchaser interest.” 2008 Dodge Viper sales were 1,172, up 169 percent over the prior year. According to another bankruptcy filing, the operation was previously been slightly profitable, with a net $16 million in 2008 before taxes, interest, depreciation, and amortization. With those kinds of numbers a buyer would need to spend several times the purchase price just to keep the assembly line humming. We all know how challenging it is these days for a sports car manufacturer to stay solvent, SUVs or not.
Ginetta
The result of rampant over capacity across the entire industry.
Any car company that doesn’t have a cost structure that allows them to be somewhat profitable is by definition worthless.
Name a car company with products that are so great / unique / critical that they someone would pay even $1B for the company if it was out of cash, losing money and shrinking in market share.
I’ll take the Rossa, thanks.
The comparison of purchases poised in the title is absolutely mind-boggling. Really. Time to crack open a Merlot.
Name a car company with products that are so great / unique / critical that they someone would pay even $1B for the company if it was out of cash, losing money and shrinking in market share.
Jaguar (hahaha)
Why would anyone pay $10m for a Testarossa? Particularly an example (ie the one that sold recently) that is hideously over-restored and has a spectacularly mediocre racing history?
Bear in mind a D-type Jaguar could be had for less than half that.
That’s a smokin’ deal for the Viper kit & kaboodle. I bet that if you wanted to buy one of those Cobra kit companies, they’d want that much from you.
…and the D-type Jaguar will be faster, more reliable, and more fun to drive.
It will also not appreciate in absolute value as much since only 34 250 Testarossas were built compared to 77 D-types. The Jag will likely beat it on a percentage basis in the near term.
Driving that used Viper factory off the lot? That will create an instant 50-99% depreciation hit on whoever throws money at it.
–chuck
With the Ferrari I’m the mysterious Racer X. With the Viper franchise? Not so much.
Edward: it isn’t close.
Nicodemus & Chuck: still a better idea. A C-type would be pretty cool too.
I wonder if that includes the rights and production facilities for the V10. That should be worth something especially if it includes the iron block version for trucks.
With those kinds of numbers a buyer would need to spend several times the purchase price just to keep the assembly line humming.
I’m not sure that’s the case since just about everything is supplied as subassemblies from suppliers. The Conner Ave. plant is a simple assembly line. It doesn’t even have a paint shop, the body panels come in already painted. On what would a potential buyer have to spend money? A dealer network? There’s no shortage of dealers obviously.
I know very little about business but it seems to me that a $70-$100 million business with an annual profit of $16 million might be a good deal at only $10 million.
UAW contract, work rules, and local shop committee included at no additonal charge.
Seems like a good fit for Rousch, Fiskar or one of the Cobra kit people. But, obviously none of that crowd has taken the bait, and they know a whole lot more about that kind of business than I do.
Gettlefinger could afford this easily.
Why won’t these multimillionaire union bosses pony up for the people that made them rich?
The UAW would have no problems making this a profitable operation.
Yeah, right.
I know very little about business but it seems to me that a $70-$100 million business with an annual profit of $16 million might be a good deal at only $10 million.
That 16mil is going to shrink if you can’t come up with new product.
Why would you need to?
The Viper is already Federal-approved and meets any requirements your standard kit-car or small-run sportscar will need to meet, anyway.
Produce them. Profit. Eventually scale down production (after three or four years) till you’re at just a few hundred a year, when popularity goes down… offer a thousand “limited edition” options, and keep flogging it till it’s barely break-even, then sell it to someone else.
I figure you can clear a good 20 million or more off of the brand, as a small-time producer. If you’re another manufacturer, you could make it into a sub-brand.
Mostly likely they will be in the red for this year and next, and you’re essentially betting the market will turn around before enthusiasts lose interest in what is a fairly fashion and performance conscious segment.
$16 million is more than slightly profitable–it’s about 20% of revenue. $10 million for a business capable of a $16 million annual profit? That’s a screaming deal–so clearly it’s not so simple.
I can see Telesto Ventures buying the Viper if they succeed with their bid for Saturn. Many of the Telesto people are former Chrysler execs including Tom Gale who was in charge of design when the Viper was conceived. I can also see Telesto buying GM’s Wilmington operation that builds the Pontiac Solstice / Saturn Sky / Opel GT.
I’ll take the Testa Rossa thank you. it will surely appreciate even more, and you don’t have to deal with a lot of headache. and in case you crash it you can have it fixed with your own money, you wouldn’t have to borrow from taxpayers, and meet their wrath when you decide to polish the wheel nuts…
Since the Ferrari will continue to appreciate while the Viper business will continue to depreciate, the choice is obvious…..
@Michael Karesh, John Horner, Ronnie Schreiber: I wouldn’t be surprised if some of the low-volume manufacturers such as Panoz (Sr. is a drug company gazillionaire) were already approached. They also were shown the books for previous years where Viper sales were much less than last year’s bumper crop.
I’d hit it.
I’ll take the factory, thank you. I prefer to “drive” a factory rather than a trailer queen.
I’d just ask them to throw some R&D engineers… of those they’re going to fire anyway.
And PT/Neon platform/engine tooling along the factory.
Then, it’s time to make business…
The Viper biz is a non-starter, probably because there would be absolutely no guarantee that Viper engines would be produced by the New Chrysler for the venture. No way would the engine line be included, at this price. I don’t think the engine line is even at the assembly plant.
Look at the problems that Altman & Newman had in starting up Avanti II production in the mid-1960’s BEFORE the nanny government ran everything on a macro level. Plus the only reason they got financing was a personal relationship (friendship) with a sympathetic banker.
The other thing that Newman & Altman had going for them was the fact that they were old-time straight-up guys who knew enough to actually pay their bills ON TIME without fail; and also treated their customers like kings. They also knew enough to actually make as much as they possibly could for themselves. Quite the opposite of the possibilities for Viper.
Viper’s dead.
You guys have it all backwards.. History tells us that when you “buy” any part of Chrysler you actually get paid.
Here is the right deal…
– You agree to “pay” $10M to get everything associated with Viper
– Chrysler agrees to deliver all of the parts to make say 2500 Vipers as part of the deal
– You become THE ONE and ONLY Viper guy.
Either take their factory or go build your own structure for a few million.
Hire a few guys and run THE Viper shop. Build custom Vipers, sell parts and immerse yourself in all things Viper.
But lw, there are….what, maybe 200 potential “Viper” customers in the world (based on last year’s generous Chryco Viper sales figures)?
Who wouldn’t rather have or could afford something else better, but could and would still fork out for a Viper, made by someone else?
Not worth the effort, I suspect.
Chrysler never received even a single offer for the Viper operations (per court filings) for one clear and obvious reason – they’re effectively worthless.
http://rumors.automobilemag.com/6517054/news/chrysler-never-received-offer-for-viper-operations/index.html
Fallout,
Read the rest of the article – they did in fact receive an offer of $5 million
Yes, but they (DMW) couldn’t prove they actually HAD $5.5 million (to the court’s and Chrysler’s satisfaction).
My neighbor’s 4 year old could offer $10 million for Viper by the same logic…..but neither would be considered a “real” offer.
Yeah, the Detroits News reported that the only offer fell through.