Oct 31, 2008 -
Cerberus, suck it up
Cerberus Capital Management has shown their true colors in the last few months. It's no surprise that these are money people and not industry people. Their reason to exist is to move money around... I understand that.
So now that the economy has gone in the big green trash bin, Cerberus has its eye on a prize - trade Chrysler for GMAC so they can get their hands on some of that $700 billion being made available to banks. GMAC, for those unaware, has a mortgage business in addition to the car loan business. They have stated this week they are going to apply for bank holding company status in order to apply for those federal funds.
But yesterday, reports surfaced that the Treasury Department has no interest in funding a GM-Chrysler merger. That puts GM in the very unenviable position of facing Chapter 11 within months if they don't get their hands on some cash to replenish their coffers.
As for Chrysler, Cerberus has three options:
A) Allow Chrysler to complete its consolidation plan, let them develop the vehicles in planning, and ride out the economy
B) Negotiate with Renauilt-Nissan
C) Issue an IPO for Chrysler LLC and let stockholders have some say
I'm really surprised that option C has not been mentioned by anyone. Cerberus can keep a percentage of stock as an equity share, if they haven't completed the buyout of Daimler AG, let Daimler convert their equity to stock ownership as well, and let the market do the rest.
It's no secret that the Detroit 3 have too many brands and too many badge-engineered models. A slimmed-down Chrysler could really position itself to be the survivor. Here's what should be left:
Dodge: Ram, Sprinter, Caravan, Charger, Challenger, Hornet, revamped Caliber
Chrysler: 300, Sebring
Jeep: Patriot, Wrangler, Grand Cherokee
And since most of these vehicles have it in their European offerings, bring the diesels here to the US. A diesel Caravan would blow the remaining competition out of the water. A diesel Patriot has already achieved a documented 65+ mpg in Europe. And a diesel 300 would put the marque ahead of the competition with fuel economy.
Probably won't happen that way... but it should.
