Can Chrysler be saved by a private equity fund?

[lovejoy]

Cerberus, a private equity fund will invest more than $5 billion in cash for improvements to the automotive group, Chrysler and put $1.05 billion into its financing unit, DaimlerChrysler AG said on Monday.

Never in the history of United States, a private equity fund will own and run an automibile company. Cerberus is not just another equity fund but has inside management skills and has actually been running underperformed companies like Air Canada, Alamo, car parts company in Michigan and 51% of GMAC.

Cerberus outbid others including Magna International using inside political muscle, Snow, to get the bid and now has to show how Cerberus can make cars that Americans want to buy not to mention the 19 billion dollars health care liability for the retirees and pensions.

I bet Cerberus will break Chrysler up, choke it into pieces and sell it in 5-7 years or go public. :glugglug:

How can you compete against Toyota building cars in China and paying $1.50 cents an hour or $30.00 an hour in Indiana without the monkey UAW on Toyota's back. :rofl:

 

[AFA]

I don't think so. they never learned their lesson from the 70's and 80's. Their big plan 2 years ago along with Ford and GM was to build more retro cars. I am really tired of country music and flags waving in US auto ads, while they themselves pay their execs incredible amounts of money and bonuses while laying off and shipping off jobs to Mexico.

 

[E-Ann-Hilden]

Cerberus, a private equity fund will invest more than $5 billion in cash for improvements to the automotive group, Chrysler and put $1.05 billion into its financing unit, DaimlerChrysler AG said on Monday.

Never in the history of United States, a private equity fund will own and run an automibile company. Cerberus is not just another equity fund but has inside management skills and has actually been running underperformed companies like Air Canada, Alamo, car parts company in Michigan and 51% of GMAC.

Cerberus outbid others including Magna International using inside political muscle, Snow, to get the bid and now has to show how Cerberus can make cars that Americans want to buy not to mention the 19 billion dollars health care liability for the retirees and pensions.

I bet Cerberus will break Chrysler up, choke it into pieces and sell it in 5-7 years or go public. :glugglug:

How can you compete against Toyota building cars in China and paying $1.50 cents an hour or $30.00 an hour in Indiana without the monkey UAW on Toyota's back. :rofl:

Well I agree Cerberus will either turn Chrysler around in a few years or part it out, like you mentioned. They will have to break the union legacy costs first, but that will be fought tooth and nail by the UAW. Without some more winning products like the 300, they are dead in the water. They are too dependent on trucks and SUV's and those dont sell well right now with high fuel costs and very average products.

Well Toyota imports no cars from China to the U.S. and Buick has the largest market share and builds many cars in China. Toyota, Kia, Hyundai and Honda have or are adding new plants right now in the U.S. for the U.S. market. The Japanese and Korean compete very well paying American workers $28.00 an hour and produce quality products that are in demand.

 

[Legzman]

How can you compete against Toyota building cars in China and paying $1.50 cents an hour or $30.00 an hour in Indiana without the monkey UAW on Toyota's back. :rofl:

Dunno how this will all affect chrysler...all I saw was $30/hr in Indiana! That's where I live! career change? I think so! :nanner:

I'm much closer to the hummer plant though! So that'll have to do!

 

[Christmas_Ape]

My money is on the 3 headed dog.

 

[Member2019]

Agreed ...

I don't think so. they never learned their lesson from the 70's and 80's. Their big plan 2 years ago along with Ford and GM was to build more retro cars. I am really tired of country music and flags waving in US auto ads, while they themselves pay their execs incredible amounts of money and bonuses while laying off and shipping off jobs to Mexico.

Agreed!
Look at Toyota -- not Honda, but Toyota.
Prime example of a non-American company that is more American than most of the Big 3.

If Reagan did one thing smart, it's keep Japanese companies as American as possible, and we should learn from this.
Ironically, because US labor has been cheaper and more productive than Japanese labor since the mid-'80s, it did Toyota a favor.
Toyota also builds cars in areas of the US that are "in tune with the world market," that blue collar/skilled labor is not paid wages more than those who design the vehicles.
Companies that adopt engineering-management techniques founded in the '50s and '60s aren't just finding bliss.
They are also finding a healthy number of American engineering graduates (among other nations and their graduates) who want to work for those companies.

As even Honda outsources more and more to China, and their quality is also slipping (except for products still made in Japan or some in the US),
Toyota has been going against that grain, and I'm glad to see them gain even more marketshare as a result.
Even some of the Big 3 are coming to their senses, and are back to assembly in the US and even some parts again -- but in more cheaper areas to produce outside of the "closed shop states" of labor union monopoly.
I have nothing against labor unions, just "closed shop states" that force them -- labor unions are actually good, until the government gets involved and "protects" them.

Everything I'd read of this new venture says this company is about transforming Chrylser into the lean American company it needs to be to compete with Toyota.
A big issues before with Chrysler under a German company were the deep pockets of the German parent the labor union targeted. No more!
Now they are dealing with investors who will put managers and engineers more in control, and try to transform them into a modern corporation.
The union now realizes this and realizes they can take part in the future, although if they move states, they will be losing more control.

 

[E-Ann-Hilden]

"As even Honda outsources more and more to China, and their quality is also slipping (except for products still made in Japan or some in the US),"

What is the source of this claim? on the parts? Honda is building up parts production in China for the Chinese market, I have not read anything about a major move to import to the U.S.


Porsche and Lexus lead the luxury brands, while Hyundai, Toyota and Honda set the pace among non-luxury brands. Averaging just 91 problems per 100 (PP100) vehicles.
Honda also maintains its position as a quality leader. Although Honda does not receive any awards outright, five Honda models rank among the top three of their respective segments.

http://www.jdpa.com/news/releases/pressrelease.asp?ID=2006082

Honda's Civic and Accord won mention as the best sedans, while Honda's subcompact Fit was named best budget car.

http://www.theautochannel.com/news/2007/02/28/038631.html

 

[Clarkie25]

Who cares? It's Chrysler.

 

[alexios]

Possibly....but the bigger industry question is, "can Ford and GM save themselves?"

 

[McRocket]

Possibly....but the bigger industry question is, "can Ford and GM save themselves?"

Sure.

Declare Chapter 11 so they can break their ludicrously expensive union contracts.

Get rid of half of their models. They have too many vehicles that overlap each other in sales and just cost more money.
And GM has too many nameplates. Drop Buick first. Then GMC. Then Pontiac and lastly Saturn.
Only Chevrolet, Cadillac remain.

Stop the stupid ass marketing that is boring and says nothing interesting about the products. People are not nearly as gullible as they used to be.

And forget about ever getting their market shares back to where they were even 20 years ago. Those days are gone for good (barring a major war or something).

 

[lovejoy]

One out of six jobs are dependable to automobiles industry.

If Detroit goes, so goes America !

Japan, Germany, S.Korea are making cars in China and exporting to the world.
So it is just matter of time Japan will import cars from China to United States.

"Only Chevrolet, Cadillac remain." ??? How many N.American and the rest of the world are willing to buy Cadillac. Do you know Cardillac does not even make right side driver seat and how can Cadillac sells its cars ?

 

[Member2019]

Honda's historgram is dilluting their recent QA issues ...

What is the source of this claim? on the parts? Honda is building up parts production in China for the Chinese market, I have not read anything about a major move to import to the U.S.

I personally know some of the engineers at several auto manufacturers, including Honda and Toyota.
I'm fairly familiar with the parts/assembly breakdown of many models, including the breakdown that doesn't go on the sticker.

Porsche and Lexus lead the luxury brands, while Hyundai, Toyota and Honda set the pace among non-luxury brands.

Lexus is Toyota, and most of the parts are the same.

Averaging just 91 problems per 100 (PP100) vehicles.
Honda also maintains its position as a quality leader.

Largely due to select models based on longer-term historical data.
Their more recent model redesigns of the last 3 years have not been showing their historical average.
Toyota is quickly moving up in that regard.

Although Honda does not receive any awards outright, five Honda models rank among the top three of their respective segments.

Yes, largely based on historical data.
It's hard to show reliability without a model being out a few years.
Some of the latest models (2004+) from Honda have been slacking.

http://www.jdpa.com/news/releases/pressrelease.asp?ID=2006082

I am very familiar with this study, as well as several other international and American organizations (which are fair, and they rank Toyota and Honda above US manufacturers).

Honda's Civic and Accord won mention as the best sedans, while Honda's subcompact Fit was named best budget car.

Accord is still a very solid design, largely because it's still American and Japanese assembled and parts-based.
Civic depends on the model, but the classic Sedan is also solid.

Their "Fit" is starting to give them a "Fit" though -- the "best budget car" is debated by may.
The CRV has also dropped drastically in quality, while the Toyota Rav4 has basically "changed places" with it.

http://www.theautochannel.com/news/2007/02/28/038631.html

I'm not interested in Consumer Reports views and surveys.
Most engineers ignore them.

Honda still doesn't have a solid Hybrid design.
Toyota does, and is the leader by a wide margin over anyone.

Honda is riding their histogram, and that is changing.
A lot of that has to do with outsourcing select components to China.

 

[D-rock]

One out of six jobs are dependable to automobiles industry.

If Detroit goes, so goes America !

Japan, Germany, S.Korea are making cars in China and exporting to the world.
So it is just matter of time Japan will import cars from China to United States.

"Only Chevrolet, Cadillac remain." ??? How many N.American and the rest of the world are willing to buy Cadillac. Do you know Cardillac does not even make right side driver seat and how can Cadillac sells its cars ?

You do bring up some good points. Even if Toyota is making a lot of their product here, and in some ways they are more American than the American car manufactures, sooner of later the cheap overseas labor will win out. With our flawed economic system it always has and it always will once it become viable. With our system it's almost an inevitability sooner or later it will happen. When somebody else, either one of the other big auto makers or even somebody totally knew, like some upstart Chinese company comes along and starts undercutting everybody else in price and everything else where they are not regulated everybody Will be forced to follow suit, despite any ethical or moral concerns to the contrary which quite frankly corporations have never had in the first place. Since so many people are making less they will be forced to buy the cheaper product despite what people like to claim about “choice”. Choice implies a realistic choice. I'm surprised it hasn't happen even faster, which is sad because the automobile industry has pretty much been one of the last places a normal everyday hardworking blue collar person could walk in and get a great job. Despite some people maybe not realizing it at the time even that left a long time ago.

 

[Castlemaine]

Nothing can save you if you consistently crank out shit cars.

 

[McRocket]

"Only Chevrolet, Cadillac remain." ??? How many N.American and the rest of the world are willing to buy Cadillac. Do you know Cardillac does not even make right side driver seat and how can Cadillac sells its cars ?

I was strictly referring to American sales.

Wanna save American jobs? Simple. Force the American government to dump free trade deals, at least in so far as auto sales are concerned.
Then force all manufacturers who sell cars in America to build 1 car for every car they sell (basically an American/Japanese autopact similar to what American and Canada had for years).
It may not be the answer. But it will definitely guarantee American jobs.

It may not save the Big 3 however.

 

[McRocket]

I bet Cerberus will break Chrysler up, choke it into pieces and sell it in 5-7 years or go public. :glugglug:

I wouldn't bet against it.

How can you compete against Toyota building cars in China and paying $1.50 cents an hour or $30.00 an hour in Indiana without the monkey UAW on Toyota's back. :rofl:

Big unions are ridiculous. They had a great purpose many years ago. Now they are a colossal waste of money.
If America wants to continue being the big dog, then big unions like the UAW have to die - IMO.
Not that that is anything new.

 

[calpoon]

keep wages down for americans to rise corporate profits, yeah, sounds like a real winning idea. why outsource when you can just bust unions and build your own sweat shops here cutting off the high price of imports? and what's that? now only the people that make the cars can afford to buy them? well hey, what's a little insider trading between freinds? give me a hundred autos, charge it to the company credit card, and watch my stock soar!

 

[McRocket]

I have nothing against big wages. But big benefits I have a huge problem with.
And what kind of nonsense is a job security clause? You cannot run a lean operation if you have to keep a certain number of employees simply because their union has a guaranteed job security clause.
Take all the benefits and health care clauses out and raise the wages instead. And let the worker get his/her own retirement and health care plans.
And as for job security? People get fired all the time - live with it; it's life.
Want a guaranteed job? Try Cuba. They are still communist, I believe.
Or start your own business.
Otherwise, when you work for someone else, they can always fire you - and should be able to as soon as it is financially advantageous to the company to do so.
It's harsh. But so is life.

 

[calpoon]

glad to know that you don't have to work for a living. cya in the unemployment line.

 

[AFA]

One out of six jobs are dependable to automobiles industry.

Do you know Cardillac does not even make right side driver seat and how can Cadillac sells its cars ?

This was a big problem and usually conveniently left out of arguements by US carmakers going back 20-25 years about how unfair the Japanese were and how they should get stiff tariffs. Would you want to buy a new car with the steering wheel on the wrong side?

Nothing can save you if you consistently crank out shit cars.

That's for sure, they don't age gracefully at all.

I still can't believe that a Mercedes / Chrysler merger ever took place. You know it was just a deal set up between the heads of the two companies to make megabucks on the deal. Just the damage done to Mercedes reputation marrying the company that made the K-crap, I meant K-car, "The American way to beat the pump", I believe it was.

In my neighborhood I see a lot of big Dodge Ram pickups. No one needs them here, it's really just status, (as a lot of other cars are), burning +$3 gas. House is falling down with a new truck in the driveway losing value as we speak. Chrysler should try to make a new, "old Beetle", but that wouldn't work would it? :dunno:

I have nothing against big wages. But big benefits I have a huge problem with.
And what kind of nonsense is a job security clause? You cannot run a lean operation if you have to keep a certain number of employees simply because their union has a guaranteed job security clause.
Take all the benefits and health care clauses out and raise the wages instead. And let the worker get his/her own retirement and health care plans.
And as for job security? People get fired all the time - live with it; it's life.
Want a guaranteed job? Try Cuba. They are still communist, I believe.
Or start your own business.
Otherwise, when you work for someone else, they can always fire you - and should be able to as soon as it is financially advantageous to the company to do so.
It's harsh. But so is life.

The biggest wages are always the execs who are the ones waving the flags while autoworkers lose their jobs to production out of the country. (Michael Moore did a good job with this in "Roger and Me"). Kmart gave $25 million to the guy running it to get rid of him as he was ruining the company. Another company which slips my mind, had a CEO that made 25M in each of the 5 years he ran the company and then when forced to leave received 87M in compensation.