Hyundai revs up in race for Chrysler deal

[guitarlix]

Hyundai revs up in race for Chrysler deal
Louise Armitstead and Dominic O’Connell


THE Korean industrial giant Hyundai is leading a pack of international suitors for Chrysler, the troubled US arm of automotive manufacturer Daimler Chrysler.

A takeover of Chrysler by Hyundai, which makes cars under its own brand as well as controlling the Kia marque, would be a watershed for American business.

Alongside Ford and General Motors (GM), Chrysler is one of Detroit’s big-three manufacturers. Together they have fought a fierce and largely losing battle for three decades against low-cost competition from Asian rivals including, latterly, Hyundai.

GM, still the world’s biggest car company, is also interested in buying Chrysler, a move that would speed a much-needed reduction of output by North American carmakers. GM was reported last week to have held exploratory talks with Daimler Chrysler executives.

Chrysler could be worth about £7 billion, although the purchase price would have to take into account the company’s pension deficit and mounting health-care costs, as well as the expense of closing factories.

Hyundai and other foreign bidders are said to be eager to secure access to Chrysler’s valuable dealer network. A senior banking source said that while Hyundai and GM were regarded as being in the lead, there were several potential buyers, including Chinese groups and private-equity firms.

Chrysler has been put in play by Daimler Chrysler, its German parent company. Last week, Daimler Chrysler chairman Dieter Zetsche said investment bank JP Morgan had been hired to review its future, saying “all options” were being considered.

Confirmation that Chrysler was up for grabs came alongside a tough cost-cutting programme, the third turnround plan introduced since Daimler, the German automotive group that owns Mercedes-Benz, bought the American company in 1998.

Zetsche, who was sent from Germany to run Chrysler before taking the chairmanship, said 13,000 jobs would go, along with up to 15% of dealerships and as many as one-fifth of models.

Chrysler is likely to report another big loss this year, including a restructuring charge of up to €1 billion (£675m).

Daimler’s purchase of Chrysler was one of the most ambitious transatlantic business deals ever. Jurgen Schremp, then Daimler’s chief executive, believed the takeover — which was presented as a merger of equals although Daimler held the majority stake — would transform his company into the world’s premium automotive group.

But despite the occasional good year, Daimler has struggled to turn Chrysler round. Like the other members of the Detroit big three, it has been hampered by ageing factories, an unattractive product lineup, and rising pension and health-care costs.

Hyundai already has a link with Chrysler through the World Engine Programme, a three-way manufacturing alliance that joins the two groups with Japan’s Mitsubishi. The companies combined to develop a new range of four-cylinder engines.

Car-industry sources say the other possible bidders for Chrysler would be China’s Chery and SAIC, two automotive companies with global ambitions.

SAIC has expanded rapidly in recent years, and two years ago made an abortive attempt to buy MG Rover. SAIC withdrew, but not before securing the rights to Rover designs. MG Rover later collapsed into administration.
Chery recently struck a collaboration deal with Chrysler under which it would make small cars to be sold in America through the Chrysler dealer network.

Source: None

[guitarlix]

As long as the Chinese don't get their hands on Chrysler, I'm happy. The goal is to let the American auto industry survive this tough phase and flourish in the future. If GM buys Chrysler, we're down to two companies and should anything happen to GM, it's all over. If Hyundai takes over, GM can be left alone to continue their turnaround uninhibited.

[BusyBody]

Hyundai probably just wants the factories to build its cars in NA, similar to the failed GM - Nissan alliance. Chances are they won't pay more than a nickel either for DC.

[mbukukanyau]

I think Cryslers can stand on its own if Unions let it.
Perhaps UAW should buy a stake in Crysler and make it Employee owned

[megeebee]

Originally Posted by mbukukanyau

I think Cryslers can stand on its own if Unions let it.
Perhaps UAW should buy a stake in Crysler and make it Employee owned

Chrysler is in trouble becase of mis-management and incorrect product decisions. And the unions don't have anything to do with those. The union will probably have to give up a thing or two, yes. But if the product doesn't sell, no one eats.

And who can say? Maybe this entire "sturm-un-drang" is all just to scare the union into a more giving mood.

[King Riffle]

Originally Posted by BusyBody

Hyundai probably just wants the factories to build its cars in NA, similar to the failed GM - Nissan alliance. Chances are they won't pay more than a nickel either for DC.

You're right, but you forgot something.

How far is it to your nearest Hyundai/Kia dealership?

How far is it to your nearest Chrysler/Dodge/Jeep dealership?

Hyundai doesn't have nearly as many dealerships as Chrysler does. I think Hyundai and Chrysler would be a pretty good match. Better than GM and Chrysler at least.

Also, wasn't Hyundai planning to build a pickup? If they buy Chrysler they'll have the Ram!

[SonicAerio]

Originally Posted by King Riffle

You're right, but you forgot something.

How far is it to your nearest Hyundai/Kia dealership?

How far is it to your nearest Chrysler/Dodge/Jeep dealership?

Hyundai doesn't have nearly as many dealerships as Chrysler does. I think Hyundai and Chrysler would be a pretty good match. Better than GM and Chrysler at least.

Also, wasn't Hyundai planning to build a pickup? If they buy Chrysler they'll have the Ram!

Not to mention the fact that Hyundai was toying around with possibly creating a luxury brand to put their new large RWD V8 car under since most people won't consider paying premium for a Hyundai.

So taking over Chyrsler would benifit really both companies in that there would be a place for every brand:

Chrysler - Top of the line Luxury models
Jeep - Off road/rugged
Dodge - Turn into performance division
Hyundai - Bread and Butter vehicles
Kia - Budget minded - Scion fighter

It would also shoot Hyundai to be near the top three in global sales - making the three largest players an American brand(GM), Japanese Brand(Toyota), and a Korean brand(Hyundai)

If they are already working together in shared projects such as the global 4 cylinder it would make it easier to start taking over and putting more Hyundai influnce on Chrysler vehicles because there is already some relation.

Doesn't Mitsubishi already own like 25% of Hyundai? or vise ersa? The current Caliber, Patriaot, Compass, Avenger, and Sebring all use Mitsubishi's platform

Again, making the merger easier and more plausible.

[Stéphane Dumas]

Originally Posted by SonicAerio

Doesn't Mitsubishi already own like 25% of Hyundai? or vise ersa? The current Caliber, Patriaot, Compass, Avenger, and Sebring all use Mitsubishi's platform

Again, making the merger easier and more plausible.

Mitsubishi did onwed 10 of Hyundai but I think they sold their share in 2003 http://en.wikipedia.org/wiki/Mitsubishi_motors#Hyundai

[ARCANGEL]

ummm Hello are you guys insane chrysler fallin into non american hands is worse than them merging with damlier!! it has to go american. If not GM then Ford!!

[HoosierRon]

Originally Posted by guitarlix

As long as the Chinese don't get their hands on Chrysler, I'm happy. The goal is to let the American auto industry survive this tough phase and flourish in the future. If GM buys Chrysler, we're down to two companies and should anything happen to GM, it's all over. If Hyundai takes over, GM can be left alone to continue their turnaround uninhibited.

And how is a Korean takeover of Chrysler equated with letting "the American auto industry survive"? Isn't that the survival of the Korean auto industry? Turning Dodge and Chrysler into marketing brands of Hyundai, like Kia, is not the survival of the American auto industry.

[megeebee]

"Daimler has struggled to turn Chrysler round"


People forget that Chrysler was doing very well when Daimler bought...oops, I mean "merged" with it. Chrysler did not need a savior at the time (1998). If Chrysler needs help now it is entirely the fault of the Germans that have run the place since then.

[1931Chevy]

http://www.autoblog.com/2007/02/18/t...-for-chrysler/






Hyundai and Chrysler already share their 2.4 liter "world engine" (along with Mitsubishi), and they may share much more in the future. Rumors are trickling in from all quarters about potential suitors for Chrysler, should DCX decide to cut loose its American vessel, and Hyundai is the latest one to grab headlines. The main value in purchasing Chrysler, which is suffering from crippling pension and healthcare costs, geriatric factories and indifferent product, is the dealer network.

Hyundai is making an aggressive effort in the US. The oldest thing in their fleet is the Tiburon (though it is newly-facelifted), and quality is way up. Hyundai and Kia vehicles represent good value for the money, and the instant sales organization they'd gain from a potential purchase of Chrysler would give Hyundai a further toe-hold. We're not sure how the brand change might play in Peoria, but we very seriously doubt that the rest of the Chrysler brand would be discarded just to acquire the sales organization.

There's a lot of value in Auburn Hills besides sales mooks. The Caravan and Voyager vans have been redone and are back in the game, and the LX cars still carry cachet, if not sales volume. Were the arranged marriage to occur, there would be some redundant products - such as the aforementioned vans. We're not sure how that would shake out. We bet that it costs Chrysler more to build a car than Hyundai spends, but we'd hope that the better car would win out in the corporate joust. A Sonata wearing a Chrysler badge (with some restyling, of course) wouldn't be such a terrible thing, would it?

[ChevroletRevived]

See, this is exactly why GM should buy Chrysler. I have my own ideas on what GM should do with them should they do. But this is one of the chief reasons. It's called being pro-active, and having an edge over your competitors. If there wasn't a worry of a company like Hyundai, and the Chinese, much more so, buying Chrysler, it might be a different story.

[GotAWD]

guitarlix i love the avatar, bubs was the only one missing from my avatar.

anyways it sounds like a better deal for Hyundai to pick up Chrysler then GM. Look how far Hyundai has come since the Pony. they are doing quite well and the rest of the Chrysler line up would be great for them, less R&D would be involved for say Luxury cars and Performance cars. Trucks are also covered if they do pick up Chrysler Corp.

[andy82471]

Originally Posted by ChevroletRevived

See, this is exactly why GM should buy Chrysler. I have my own ideas on what GM should do with them should they do. But this is one of the chief reasons. It's called being pro-active, and having an edge over your competitors. If there wasn't a worry of a company like Hyundai, and the Chinese, much more so, buying Chrysler, it might be a different story.

GM will sink faster than a rock if it has to take over Chrysler's legacy costs. It will completely ruin their own turn around plan. Let us face it; GM had trouble managing its own turnaround plan. They don't need this massive headache. I would prefer Chrysler to be American owned but GM shoiuld not be the owner. Not only GM and Chrysler merger raise anti trust issue, it will also lead to massive layoffs in both companies on top of the layoffs already announced. GM + Chrysler = BIG NO