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SOURCE: LeftLaneNews.com

Cerberus’ level of interest in Renault-Nissan deal low
Ocotber 23, 2008

The one deal proposed so far that would guarantee that Chrysler would live another day, part acquisition by Renault-Nissan, appears to have been met with little interest from Chrysler LLC’s current owner, Cerberus Capital Management. Cerberus is leaning heavily towards selling the entire automaker to General Motors, a move that would almost ensure the demise of the Chrysler name, as well as thousands of jobs.

The latest rumors out of Detroit say that Carlos Ghosn’s offer yesterday to acquire 20 percent of Chrysler LLC was met with a cool reception at Cerberus. Ghosn will either need to step up his offer or realize that his goal of a three-continent alliance is out of the question for another day.

According to the Detroit Free Press, Nissan, which would have put up the cash for Chrysler as Renault is in debt, was the only company seeking a minority stake in the beleaguered Detroit automaker.

Naturally, Chrysler dealers are nervous about a deal with GM. Sources close to the situation say that GM’s goal is to gain access to Chrysler 11.7 billion in cash and that the Chrysler and possibly the Dodge brands would be discontinued. Inevitably, Chrysler and Dodge dealers would be out of business with no product to sell and no support.

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This just goes to show you that Cerberus cares nothing for Chrysler. Its entire aim is to get their hands on the other half of GMAC and they will do all they can to get it - PERIOD.

Analysts have been going back and forth over how/if Chrysler could benefit from a merger with GM or an alliance with Renault-Nissan. So far there is great skepticism for either proposal.

However, many point out that a Renault-Nissan alliance would be "preferrable" to the folks in Auburn Hills cause it will mean less cuts in employees, a chance to remain independent, better use of existing factories, and greater synergies moving forward with less overlap.

Thought I'm a GM fan through and through, a merger of GM and Chrysler would be painful for both sides. Besides job losses and possibly shedding more brands, it will also mean another American Icon is eliminated. It would be somewhat fair to say that Chrysler would have a "brighter future" as a company under Renault-Nissan than a full out forced merger/absorption with General Motors.

However, Cerberus DOESN'T care. They'd rather push a shotgun wedding on GM and Chrysler which could hurt both companies than pursue any kind of industrial alliance with Renault-Nissann - even if the latter makes more sense.

Why? Cause they want a piece of the governments $700 billion bailout. And they are hell bent on merging Chrysler Financial and GMAC and will do all they can to achieve this end.

Its just more proof that the folks at Cerberus don't have a clue about what it takes to run a car company in the long term.

Did they make some good decisions in their short stewardship? Yes -- Bringing on Jim Press, consolidating the dealer network, promoting Ralph Gilles, and eliminating overlapping products on the show room floor -- ALL GOOD!

But what of the rest? A complete disaster! Private equity may be good to restructure Dunkin' Donuts, Toys R' Us, and banks, but not for a complex and integrated business like a car company.

I fear for Chrysler and their employees right now.
 

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I think that anyone with common sense can see this deal will be disaster for GM, Chrysler, and the country. Why the unions, politicians, and others are sitting on their duffs and not doing anything about this Titanic-like disaster is beyond me.
 

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They never cared about cars, Capital Management acres about that, "Capital"
Bingo! We all knew the Cerberus acquisition of Chrysler was not going to end well.
 

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Cerberus seems to quickly have learned that the car business is a lot tougher than the finance 'industry' - hence they want to get back to renting (loaning) money - leave all that steel and rubber and glass to the boring Germans and Japanese...and Koreans...and Indians...and Chinese. Because, evidently, every corner of the earth is more suited to industrial production of automobiles than bad ol' America - we just move money around.

If GMAC is in such trouble, why does Cerberus want it so badly?

I was pouring over some old road tests of the Chrysler 300 from the fifties - among the writers of the time, there was a kind of dumbstruck awe in response to the 300 - a recognition that it was a sine qua non. Though a Buick Century was considered a fast car at the time, the 300 wasn't screwing around with Dynaflow or wallowing suspension - it was in another universe with suspension, braking - even bucket seats years ahead of their time. It was the best car in America, and quite arguably, the world.

Lets get back to making world class products rather than just moving money around and churning up 'management' fees.
 

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Do you think we'll ever have competent designers and upper management at GM that could bring back glory to the giant? It seems that most folks in auto design school already have their eyes set on BMW, MB, Toyota, Honda, Nissan....anyone BUT GM or Ford. I truly believe that's a direct result of the crappy years of the American car industry, from the mid 70s to the mid 90s. Granted, a bad 20 year run of resting on laurels, cowtowing to UAW demands and generally thinking that having a 50% market share meant you didn't need to update.
I can only dream.
 

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It's quite obvious Cerberus has no interest in anything but 100% divestiture of Chrysler. It's also quite obvious they want GMAC, especially as they know that long term GMAC is a great asset, especially with the bailout and the ability to sell to the feds a slew of bad loans.

Ghosn wants a 20% stake, Cerberus wants to off 100% of Chrysler. Only GM has tendered a complete offer. Cerberus probably also doesn't want to do any divvying up, though I'm sure they're willing to brutalize the dealer network if required.

I still think GM will get Chrysler (all of it) either through an asset sale or in some other way so that the cost to GM is effectively nil. Then, GM will sell off swaths of Chrysler.
 

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As I have said before, the truth of the matter in my opinion is GM really doesn't want to do this, they know its a bad deal with mor baggage than they can swallow but Cerberus is in effect extorting GM to take it on by using financial leverage over GM's potential consumers and its dealers by refusing to provide consumer and dealer loans. The stink of this whole thing is in the end the only thing the public will hear or believe is GM bought Chrysler and dismantled it putting thousands out of work and the backlash on GM will be severe. When in reality they are being given no choice for the most part. Part of the deal has to be Cerberus freeing up financing to GM customers and Dealers once the deal is done. This is the only real rational explanation. However if I was GM I wouldn't trust Cerberus any further than I could toss a shotput.

GM and its management is going to get blamed for making a decision they have little choice in making, and anyone working for GM is going to get blamed for the job losses which sucks bigtime.
 

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As I have said before, the truth of the matter in my opinion is GM really doesn't want to do this, they know its a bad deal with mor baggage than they can swallow but Cerberus is in effect extorting GM to take it on by using financial leverage over GM's potential consumers and its dealers by refusing to provide consumer and dealer loans. The stink of this whole thing is in the end the only thing the public will hear or believe is GM bought Chrysler and dismantled it putting thousands out of work and the backlash on GM will be severe. When in reality they are being given no choice for the most part. Part of the deal has to be Cerberus freeing up financing to GM customers and Dealers once the deal is done. This is the only real rational explanation. However if I was GM I wouldn't trust Cerberus any further than I could toss a shotput.

GM and its management is going to get blamed for making a decision they have little choice in making, and anyone working for GM is going to get blamed for the job losses which sucks bigtime.
Exactly.

I heard just yesterday that GMAC Canada will only finance a new vehicle for Invoice plus 5%. Meaning even if you have great credit, you still basically have to have the taxes as a down payment.
 

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The guys at allpar have an interesting take on the deal. They think that Cerberus wants to kill the chrysler name, so the deal is being portrayed as a GM takeover. But the people with all the power at the end of the deal will be on Chrysler's side of things (Cerberus could make that happen since they have GMAC and more cash to throw around than GM). Maybe that's why only one guy at GM is pushing for this deal and the rest are pretty resistant.
 

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Exactly.

I heard just yesterday that GMAC Canada will only finance a new vehicle for Invoice plus 5%. Meaning even if you have great credit, you still basically have to have the taxes as a down payment.
They want the same in the US. Before the days of "zero down" it was usually 10%. Long ago you needed 10% to 15% to finance anything. This new generation has been raised on nothing down and no payments for six months. That's over!! Finance companies are going back to the basics.
 

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I just read at DETNEWS.COM that Chrysler lost $ 772.5 Million in the second quarter. Not a small amount of money, even by GM's crazy standards and losses....

Just my opinion, but I wouldn't give Cerberus anything to pull their fat our the fire. Let them burn... they deserve it.
 

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They want the same in the US. Before the days of "zero down" it was usually 10%. Long ago you needed 10% to 15% to finance anything. This new generation has been raised on nothing down and no payments for six months. That's over!! Finance companies are going back to the basics.
What somebody wanting you to have a little somethin' somethin' in the game? Say it ain't so. I'm with you. I see no problem with making people put money down on something that is financed. It might make you think twice about not paying if you are not just renting but rather have a couple of grand to loose also.

Financing 110% of anything is never a great idea. Even worse was the Mitsubishi no payments for 6 months financing in the past.
 

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What somebody wanting you to have a little somethin' somethin' in the game? Say it ain't so. I'm with you. I see no problem with making people put money down on something that is financed. It might make you think twice about not paying if you are not just renting but rather have a couple of grand to loose also.

Financing 110% of anything is never a great idea. Even worse was the Mitsubishi no payments for 6 months financing in the past.
Yes but in the car business it is tough.

#1, No leasing at GMAC, almost 50% of GM's customers affected.

#2, 700 Credit Score or higher to obtain Financing, 50-70% of GM's customers affected.

#3, Finance 105% of Invoice, 60% of GM's customers are trading in a vehicle that they are "Upside Down" owing more than what it is worth. While tomorrow their new purchase will be worth 60% of what they paid for it.

#4, Many GM dealers have their mortgages and floor plans through GMAC, paying prime +1-2%, come January 2009, look for Prime +6% or more guys.

Cerberus's next investment, a couple of years. GM it's self, and pick at it's bone to turn a profit.
 

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I just read at DETNEWS.COM that Chrysler lost $ 772.5 Million in the second quarter. Not a small amount of money, even by GM's crazy standards and losses....

Just my opinion, but I wouldn't give Cerberus anything to pull their fat our the fire. Let them burn... they deserve it.
-775 million per quarter is a lot better than being -3 billion+ per quarter.
 
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