[Lichtronamo]

RANTS #468

October 22, 2008

GM scrambles for cash as Cerberus turns to – big surprise - Carlos Ghosn.

By Peter M. De Lorenzo

Detroit. That the idea of GM trying to absorb Chrysler in the midst of the most severe economic crisis since the Great Depression is now officially looking ludicrous cannot be disputed at this point. Long term - meaning five years down the road - a GM takeover of Chrysler might have made sense - on paper or in some collegiate economics class - but short term it would have only spelled untold trials and tribulations for the company. Not to mention the fact that GM doesn’t have that kind of time. No one in this business has that kind of time right now.

Why? Despite the lure of Chrysler’s alleged cash stash of $11.7 billion, there is no way GM could have unwound Chrysler at the rate necessary to achieve even a modicum of efficiency, let alone success. And they would have burned through much of that cash - and consumed much of their time - in trying to jettison Chrysler’s nonessential assets and on resolving union issues instead of trying to make the whole thing work. In other words, absorption of Chrysler by GM would have been an unmitigated disaster in real-time. Not to mention the obvious fact that GM can’t even manage the brands they have now, so the whole idea was a train wreck of Not Good.

We have now learned a couple of things during this episode, however.

FULL ARTICLE: http://www.autoextremist.com/

 

[Lichtronamo]

PDL Jr. seems to have a definite "past tense" take on the whole GM-Chrysler merger idea. If Cerberus is left only to dance with Ghosn, the end for Chrysler is really and truly near as Renault-Nissan really only want Dodge Trucks, Jeep and cheap manufacturing capacity.

 

[AMERICA 123]

No, Renault represents the best chance for a prosperous and successful Chrysler that is recognizably Chrysler.

Renault can take Chrysler all around the world - they do not overlap by much.

Watch, DCT and Phoenix will end up safe and going forward.

Notice Renault is not Nissan Renault.

Viva La FRANCE !!

 

[AMERICA 123]

GM's flailing around here probably has as much to do with them trying to protect Two Mode tech etc.

 

[Corvette C10]

GM's flailing around here probably has as much to do with them trying to protect Two Mode tech etc.

So true, very true.

 

[Stéphane Dumas]

No, Renault represents the best chance for a prosperous and successful Chrysler that is recognizably Chrysler.

Renault can take Chrysler all around the world - they do not overlap by much.

Watch, DCT and Phoenix will end up safe and going forward.

Notice Renault is not Nissan Renault.

Viva La FRANCE !!

+1 and Renault might found also a good executive car (Chrysler 300) to replace their Vel Satis. The Logan aka Nissan Aprio could be an addition to the Dodge line-up (new Dart? or Rambler? I would had wished for a revival of Plymouth but I should don't take my dreams for reality)

Add also then the upcoming Renault 3.0L V6 CDI turbo-diesel (scheduled to go under the hood of the Maxima for 2010) could be a welcome addition under the hood of the 300/Charger, Grand Cherokee as a replacement of the Mercedes one.

 

[tgagneguam]

I am a free/fair market advocate, and I realize that that means at times our somewhat storied brands will fall under a foreign corporate umbrella. We may see that with Chrysler Group, as we have seen chunks of historic-albeit horribly [mis-]managed-financial institutions fall prey to foreign groups in part or in whole. I think the process of shifting our wealth-including the sale of our companies-overseas will be accelerated by government interference in the markets. Funny that this thread is presently placed in the unassigned thread-starter forum alongside GMusa's posted thread, "Sen. Carl Levin Thinks Feds Could Help With GM-Chrysler Merger."

Again, I don't have a problem with historic brands falling under foreign ownership, as long as the purchasing of assets occurs in both directions. However, as long as politicians, be they "jackasses" or elephants, feel that they know better than the market how to operate the market, we will continue to see American brands like Budweiser fall to InBev, we will see Sovereign Bancorp's remaining shares bought by Banco Santander, we will see IBM sell its PC division to China-based Lenovo Group, and much more. This will reflect bankrupt policies that see our nation borrowing more and more money to "save" American industry, thereby sacrificing our future prosperity with greater debt burdens, creating a situation wherein the dollar is weakened, and leaving our nation beholden to foreign interests. Sad, really.

 

[AMERICA 123]

+1 and Renault might found also a good executive car (Chrysler 300) to replace their Vel Satis. The Logan aka Nissan Aprio could be an addition to the Dodge line-up (new Dart? or Rambler? I would had wished for a revival of Plymouth but I should don't take my dreams for reality)

Add also then the upcoming Renault 3.0L V6 CDI turbo-diesel (scheduled to go under the hood of the Maxima for 2010) could be a welcome addition under the hood of the 300/Charger, Grand Cherokee as a replacement of the Mercedes one.

I'm with you. Contrary to all the negativity, Chrysler's a catch at this point, and especially a good fit with Renault for here, there, and every where.

Yes, Plymouth - why not.

Then take the Chrysler name more up market.

I do think down the road it may believe it or not be desirable ( yep) to cut Nissan loose or keep them in a looser alliance.

Right after the US firms get their beating the Japanese firms go next.

Gonna' be a big surprise for some.

 

[johnny smallblock]

GM's flailing around here probably has as much to do with them trying to protect Two Mode tech etc.

That's a great point. I had forgotten about that angle. GM basically developed the technology themselves, and brought DCX and BMW in at the end for partial funding. Then, GM was only sharing the 2-modes with 2 other companies.

With the DCX split, that became 3 other companies.

If R-N buddies up with Chrysler, then Nissan and Infiniti will have the 2-modes also. And they won't have to pay GM any license fees for it. Not cool.

 

[nadepalma]

An interesting writeup - if a bit doom and gloom - and brutally honest. And I'm not sure what to make of it all.

Part of me feels that GM taking over Chrysler is a huge mistake and it will take YEARS for them to sort it all out. But part of me thinks that if Chrysler is to have a suitor, I'd rather them be a domestic manufacturer since it may help the domestic parts supply companies survive as well, create better opportunities for the brand overseas, etc.

On the other hand, Renault-Nissan would not take over Chrysler, but become a viable production/development partner (at least I hope so - it should remain mostly independent). I like that a great deal. However, we've also seen how Renault's influence has had mixed results at Nissan. Sure, they are better off than they were years ago, but even after years of the alliance, Nissan sales still aren't where they wanted them to be. The Renault influence has also crept into Nissan's designs as well (the Quest is an example) and some haven't been all that happy with it.

So all of it is a mixed bag.

What I would like to see is either FoMoCo or GM create their own industrial alliance with Chrysler rather than a full take over. I'd rather see them share resources to help domestic manufacturing as whole. I could see GM using Chrysler's LY platform for a DTS replacement (if CAFE weren't an issue - but it IS) or Chrysler using GM's 6spd autobox for some of their products. Or FoMoCo using GM's two-mode hybrid technology for trucks or GM using FoMoCo's or Chrysler's emerging CVT or Dual-Clutch technologies for GM products, etc.

That would be my dream-scenario -- but I dont think its in the cards and that's a shame.

 

[zete]

That's a great point. I had forgotten about that angle. GM basically developed the technology themselves, and brought DCX and BMW in at the end for partial funding. Then, GM was only sharing the 2-modes with 2 other companies.

With the DCX split, that became 3 other companies.

If R-N buddies up with Chrysler, then Nissan and Infiniti will have the 2-modes also. And they won't have to pay GM any license fees for it. Not cool.

Depends on how the contract was written. And there are usually kill clauses embedded in most contracts allowing the originating party to kill the contract on a given notice.

I, too, had forgotten about 2-mode.

 

[TriShield]

Funny nobody is talking about what he wrote about GM. Which is all true.

It's publicly displayed just how completely screwed GM is.

 

[ColoradoZQ8]

I'm with you. Contrary to all the negativity, Chrysler's a catch at this point, and especially a good fit with Renault for here, there, and every where.

Yes, Plymouth - why not.

Then take the Chrysler name more up market.

I do think down the road it may believe it or not be desirable ( yep) to cut Nissan loose or keep them in a looser alliance.

Right after the US firms get their beating the Japanese firms go next.

Gonna' be a big surprise for some.

It really would be a stroke a brilliance to take the existing Renault or Nissan small cars --
and rebadge them as Plymouths to sell at the existing Chrysler/Jeep/Dodge dealers.

Not only would Renault/Nissan get more volume sales, Chrysler would get the small cars they sorely lack..... and affordable cars to sell throughout this recession (Plymouth saved Chrysler throughout the great depression).

 

[paul8488]

If GM gets Chrysler it's over. They'll close it as soon as possible.

If Renault/Nissan gets Chrysler they'll try and save at least some of it. They might not be able to do it, but they'll try.

 

[AMERICA 123]

GM basically developed the technology themselves, and brought DCX and BMW in at the end for partial funding. Then, GM was only sharing the 2-modes with 2 other companies.

With the DCX split, that became 3 other companies.

If R-N buddies up with Chrysler, then Nissan and Infiniti will have the 2-modes also. And they won't have to pay GM any license fees for it. Not cool.

I'm beginning to think its about a lot more than Two Mode, and more than just RN getting access to all of it.

Amongst other hidden agendas, the Banks and WS are trying to migrate GM's future tech out to other firms they have big money in.

Its really more about them and not the OEMs per se.

Essentially they're herding GM, Chrysler, and parts of Cerebus along by helping to impede their access to the retail credit that they need to sell cars.

 

[paul8488]

Oh, and at least in Europe, Renault + Nissan + Dodge could maybe work. Not sure how much success Dodge is having in Europe right now, but I see a few, and I certainly see more advertisements for Dodge than Chevrolet. They have a look all their own, and not many pruducts that overlap directly with Renault, and only a few that overlap with Nissan.

Oh, and Jeep is cool all over the world. So it's certainly a welcome addition.

 

[AMERICA 123]

It really would be a stroke a brilliance to take the existing Renault or Nissan small cars --
and rebadge them as Plymouths to sell at the existing Chrysler/Jeep/Dodge dealers.

Not only would Renault/Nissan get more volume sales, Chrysler would get the small cars they sorely lack..... and affordable cars to sell throughout this recession (Plymouth saved Chrysler throughout the great depression).

YEP.

Lots of crazy out of the box stuff like that could work and work well.

 

[AMERICA 123]

Also wonder if this is some how in here as well - in more ways than one.

Schrempp testifies in shareholders' lawsuit

STUTTGART, Germany -- Former DaimlerChrysler AG boss Juergen Schrempp on Tuesday rejected allegations that the deal he oversaw to create DaimlerChrysler in 1998 undervalued his company's shares, denying a group of investors of potential profits. Schrempp spoke to a court that opened a new hearing on a suit by former shareholders over the handling of the 1998 combination of Daimler-Benz AG with Chrysler Corp.

 

[KingElvis]

No, Renault represents the best chance for a prosperous and successful Chrysler that is recognizably Chrysler.

Renault can take Chrysler all around the world - they do not overlap by much.

Watch, DCT and Phoenix will end up safe and going forward.

Notice Renault is not Nissan Renault.

Viva La FRANCE !!

Would love to see the Charger and Challenger preserved at least.

In a sense, Chrysler's lack of a competitive mid sizer is a vice that has become a virtue - there's no direct competition for the Altima this way.

You could contend that the Infiniti rear drivers overlap some with the LX chassis, but not much. Only a loaded R/T really overlaps the G37- SE and SXT don't compete with the Infinitis price-wise.

 

[sepi]

A Nissan-Renault-Chrysler deal would make complete sense - Nissan and Renault make good to great small vehicles (a Chrysler weakness), Chrysler makes good rear-wheel drive vehicles (a Nissan-Renault absence), and Dodge brings already developed truck assets to the table where Nissan is failing miserably - plus there is already a working relationship.

I truly hope Nissan-Renault does this deal and screws GM. While I am not a Chrysler fan in particular, I would hate to see what GM would do to it after watching how GM has destroyed itself with indifferent products, awful decisions, and simply stupid management.