  Douglasm Member Username: Douglasm Post Number: 763 Registered: 10-2003 |
There are reports all over the place that Chrysler and Fiat could come to an agreement of some sort, and that an announcement could come sometime this week. http://online.wsj.com/article/ SB123238519459294991.html Interesting idea. Fiat would like to come back into the U.S. market...this would give it a dealer network and manufacturing plants, and Chrysler would get small car technology and outlets in Europe..... | ||
Detroitej72 Member Username: Detroitej72 Post Number: 1064 Registered: 05-2006 |
From what the article state, it sounds like this could be a win-win for both companies. Chrysler would gain some footing aboard and Fiat would gain dealership networks in the U.S. I like that Fiat would use American factories to build cars here. That bodes well for all Chryler's plant workers. | ||
Douglasm Member Username: Douglasm Post Number: 764 Registered: 10-2003 |
And both companies really need someone to partner with. If it's true, this one could work..... | ||
Mopardan Member Username: Mopardan Post Number: 84 Registered: 11-2008 |
There are some positive potentials there. Now if Daimler would just sell their remaining 19% & get the hell out of Dodge, so to speak. | ||
Pinewood73 Member Username: Pinewood73 Post Number: 72 Registered: 07-2006 |
I like it | ||
401don Member Username: 401don Post Number: 914 Registered: 11-2007 |
It would be interesting to have a car company that makes just trucks, crossovers and small cars. The Sebring is crap, 300C sales are plunging and I get the feeling their big muscle cars are not long for this earth so does Chrysler really need to be in the mid to large car mkt anymore? | ||
Dtowncitylover Member Username: Dtowncitylover Post Number: 447 Registered: 02-2008 |
This would be really cool because Fiat is HQed in Turin, Italy, which is a sister city of Detroit. | ||
Angry_dad Member Username: Angry_dad Post Number: 294 Registered: 02-2006 |
I would expect Magna to somehow get tied into this deal. Chrysler really needs to get rid of Cerebus. And vice versa. | ||
Lmichigan Member Username: Lmichigan Post Number: 4011 Registered: 10-2003 |
I'm liking this idea, or, at least, it seems better than all of the other schemes we've heard about with Chrysler over the last few months. Because, everyone knows as it now stands that Chrysler is not long for this world. | ||
Orange_barrel Member Username: Orange_barrel Post Number: 86 Registered: 02-2008 |
Hmmmm. Didn't GM try to build an alliance with Fiat recently? How did that end? Oh yeah. GM paid Fiat 2 billion dollars to get lost. One would think that would give Cerberus pause... | ||
Mopardan Member Username: Mopardan Post Number: 85 Registered: 11-2008 |
"Under terms of a pact that is being hammered out, Fiat is likely to take a 35% stake in Chrysler by the middle of this year. It would have the option of increasing that to as much as 55%, these people said." ... "The pact with Fiat could give Chrysler a stronger case as it seeks more loans from the U.S. government. Chrysler nearly ran out of money late last year, before the Treasury Department provided $4 billion in emergency loans, and has suffered a steep drop in sales in the past three months. The auto maker needs to show it can remain a viable business by March to keep those loans and to qualify for the $3 billion in additional government aid it says it needs." | ||
East_detroit Member Username: East_detroit Post Number: 1826 Registered: 11-2003 |
Sounds like a good idea. Chrysler needs a global presence and small vehicles to bolster their lineup. Fiat needs more of a North American presence. | ||
Gistok Member Username: Gistok Post Number: 6052 Registered: 08-2004 |
... it's a win-win if it involves foreign brand autos NOT made in Alabama...  | ||
Mopardan Member Username: Mopardan Post Number: 86 Registered: 11-2008 |
Here's the announcement: http://www.freep.com/article/2 0090120/BUSINESS01/90120021/Ch rysler+announces+alliance+with +Fiat Why do I feel like this is the Italian version of the Daimler deal? Looks like Yuppies will be crying in their triple mocha lattes today. If nothing else, it'll give me ammo to use on my neighbor who drives Beemers exclusively & hassles me about Mopar. http://finance.yahoo.com/news/BMW-to-reduce-work-hours-for-apf-14100266.html (Message edited by MoparDan on January 20, 2009) | ||
Rb336 Member Username: Rb336 Post Number: 8300 Registered: 02-2007 |
I think this makes perfect sense -- there is little overlap in their product lines or markets. only problem: both companies have quality issues perhaps Alfa will be distributed via the chrysler dealer network? | ||
Mopardan Member Username: Mopardan Post Number: 87 Registered: 11-2008 |
An excerpt from another release: It is likely that part of Fiat's stake will come from Daimler's remaining share in the company. "Daimler welcomes any initiative which enables Chrysler to stabilize its situation and to secure jobs in the company," spokesman Thomas Froehlich said. "It is still our intention to dispose of our 19.9 percent stake in Chrysler," Froehlich said, declining to comment further. ... Good! The so-called "merger of equals" with Daimler was never a good one for Chrysler in the first place. The sooner Daimler is out of the picture, the better. I only hope this "strategic alliance" with Fiat doesn't result in Chrysler being thrown under the bus. | ||
Irish_mafia Member Username: Irish_mafia Post Number: 1233 Registered: 10-2003 |
Fix it again Tony | ||
Mopardan Member Username: Mopardan Post Number: 88 Registered: 11-2008 |
More excerpts: "The agreement will offer both companies opportunities to gain access to most relevant automotive markets with innovative and environmentally friendly product offering, a field in which Fiat is a recognized world leader, while benefiting from additional cost synergies," said Fiat CEO Sergio Marchionne. Fiat shares on the Milan stock exchange surged more than 4 percent to euro4.66 ($6.03). Economy Minister Giulio Tremonti hailed the deal as "a sign of vitality." The deal is the latest coup for Marchionne, who returned the once-struggling Fiat to profitability after taking the helm in 2004. As part of his strategy, the turnaround expert dissolved in 2005 an alliance with General Motors Corp. that could have forced the U.S. company to buy the 90 percent of Fiat it did not already own. GM agreed to pay the Italian automaker $2 billion, mostly in exchange for canceling the clause. However, Marchionne had recently warned that independence was no longer sustainable amid the financial crisis, indicating Fiat was looking for new partners. | ||
Jerome81 Member Username: Jerome81 Post Number: 879 Registered: 11-2003 |
http://www.thetruthaboutcars.c om/editorial-chrysler-suicide- watch-42-la-grande-bugia/ | ||
Mopardan Member Username: Mopardan Post Number: 89 Registered: 11-2008 |
Time article: http://www.time.com/time/busin ess/article/0,8599,1872719,00. html Tuesday's joint statement notes that "Fiat would provide management services supporting Chrysler's submission of a viability plan to the U.S. Treasury as required. Fiat has been very successful in executing its own restructuring over the past several years." ... We shall see. The US Auto Industry has a more sympathetic ear in the White House now. Not to say Obama will give them TARP money blindly, but he'll be much less hostile than Corker & Shelby. Of course those two guys have absolutely no problem dropping to their knees to lure foreign transplants to their backwater states. | ||
_sj_ Member Username: _sj_ Post Number: 1632 Registered: 12-2003 |
With GM possibly asking for more money and now the suppliers wanting to approach Washington hat in hand, do not be so sure the public will not show displeasure again with this and it is possible the hostility will only increase. | ||
Glowblue Member Username: Glowblue Post Number: 137 Registered: 09-2008 |
The public's been heavily opposed to all the bailouts, yet here we are. | ||
Mopardan Member Username: Mopardan Post Number: 90 Registered: 11-2008 |
From Allpar: http://www.allpar.com/weblogs/ 2009/01/20/fiat-the-best-choic e/ Considering that Bush made no attempt to hide his contempt for the US Auto Industry, the UAW in particular, that made it easier for shills such as Corker & Shelby to argue against it. Obama has made it a point that the industry needs to come up with a feasible plan for restructuring. This may not be popular, but considering what they're asking for isn't even 5% of what the financials were given, the loans will probably be approved. Throw in that Obama is from the midwest & labor played a big part in his election, that can't hurt the Auto Makers' cause. I also recall him saying that we needed to save our industrial & manufacturing base; again, this plays in their favor. I'm not thrilled with this Fiat situation, but Chrysler has basically fulfilled one of Corker's biggest complaints: that they need to be part of something bigger or a merger. But being the politician that he is, he'll harp on union pay because that's what plays in Redneck Nation. | ||
Bosch Member Username: Bosch Post Number: 52 Registered: 11-2008 |
So why did the Daimler partnership fail, and how will Fiat be different? | ||
Lmichigan Member Username: Lmichigan Post Number: 4017 Registered: 10-2003 |
Because Daimler and Chrysler had some major overlap in their assortment of products. Fiat and Chrysler are much more complementary. | ||
Mopardan Member Username: Mopardan Post Number: 91 Registered: 11-2008 |
The text below is from the Allpar site & gives a decent overview before the Cerberus deal. How will it be different from Fiat? Maybe the Italians aren't as big a pricks as the Germans are. Then again, Mussolini was emulated by Hitler early on... Here ya go! The problem with Chrysler since 1998 has been running the company for the benefit of Mercedes, not for the benefit of DaimlerChrysler as a whole. Getting out from Daimler is a plus; Chrysler has been cut to a third of their prior size and have been constrained in what they can make. The question is never "what would make a good profit," it's "what can Mercedes use and what can use Mercedes parts" (with a huge dose of “no, that might take away Mercedes sales.” Money was spent on a Crossfire replacement when we need a Neon replacement, and building the LX and JS to Mercedes architectures no doubt increased their weight and cost. The Mercedes five-speed automatic is more expensive and less reliable and lower performing than the ZF automatic, from what I've been told - not to mention Chrysler's own five-speed truck automatic, which is eminently usable on cars (having been developed from the ancient TorqueFlite). Though (as of May 16, 2007) we're sure there are plenty of strings attached to this deal, Chrysler will be run by people who want to make money, not transfer profits to another division's budget line and pretend they're losing money, as it appears Daimler has been doing. Just as you wouldn't want Toyota to make the Corolla a downsized Lexus LS, you don't want the Sebring to be a downsized S-Class just to lower the component costs of the S-Class. That's one of the things that killed GM - according to DeLorean anyway - was when they lowered Caddy and Olds costs by making Chevy and Pontiac accommodate them. Yes, it lowered the total number of parts in inventory, and yes, it made parts cheaper for Caddy and Olds, but it also made Chevys and Pontiacs too heavy and expensive to make! Another good thing to come out of this is, hopefully, the removal of the German (and American!) "cost-cutting experts" who have made Chrysler's cars less competitive. [Though with the choice of CEO, things might stay the same or get worse.] Maybe Chrysler can start to add back in all those things that made their vehicles special to their owners - things like comfortable seats and windshield wiper de-icers for minivans, not to mention four-cylinder engines that produce some torque at low rpm. One particular rapid cost-cutter is certain to remain in Stuttgart. And we're probably not going to see any more "German engineering" ads! (Message edited by MoparDan on January 20, 2009) | ||
Fury13 Member Username: Fury13 Post Number: 2022 Registered: 10-2003 |
Bring back the Plymouth brand... make Dodge for trucks only. | ||
Mopardan Member Username: Mopardan Post Number: 92 Registered: 11-2008 |
It would be nice to bring back the Plymouth line since Daimler felt it needed to be killed off. But with everything else, it would need to have a mission & purpose. Plymouth was the entry level vehicle into the Mopar lineup, the “working man’s car”. It could be done, but there would have to be distinctiveness between the divisions again. That has been blurred with models such as the Charger/300; building on the same chassis is fine & nothing new, but the options are practically the same. For instance, a Charger R/T shouldn't show up at the dealer with every option known to man & priced beyond what most people can afford(or willing to pay). If Plymouth were revived, an entry level model with just the bare bone luxuries(A/C, Radio/CD, Power Windows) could be produced. Then again, this could be applied to Dodge as well. To have them build only trucks probably isn’t feasible. It’s been speculated that a restructuring of GM would eliminate the GMC brand & badge them as Chevies. If & when Chrysler can get back on its feet again, maybe Plymouth could be reintroduced. With this “strategic non-binding alliance” with Fiat, that may not happen though. | ||
Townonenorth Member Username: Townonenorth Post Number: 721 Registered: 10-2007 |
I've always thought that Chrysler had the right idea when they did the "America" series years ago. A stripped down, basic transportation car. That experiment didn't last long, but it could have it's advantages in today's economy. | ||
Fury13 Member Username: Fury13 Post Number: 2024 Registered: 10-2003 |
The Plymouth of the '50s, '60s, and '70s offered as many options as Dodge. It was a Chevy and Ford competitor... "low-priced" like the competition, but not necessarily "bare-bones." You could get a Fury or a Belvedere or a Valiant in basic trim, sure, but you could also option out a Plymouth nicely too (with the same kind of high-performance engines and convenience accessories that Dodge offered). No, the positioning of Plymouth only as a stripped-down, basic automobile came later, in the late '70s and early '80s. Likewise, Dodge was originally positioned to compete with Pontiac and Mercury (a car priced at the lower end of the medium-price range), but it eventually moved down in the price bracket to go head-to-head with Chevy and Ford. That sort of left Plymouth in an "orphan" role, with a status below Dodge, Chevy, and Ford. Even back in the '80s, it was easy to see where that lowly position would lead for Plymouth: oblivion. There are lingering rumors that some pro-Dodge execs within Chrysler started the process to kill off Plymouth as early as the '50s, although Daimler certainly finished the job after the brand was devalued throughout the '80s and '90s. (Message edited by Fury13 on January 21, 2009) | ||
Mopardan Member Username: Mopardan Post Number: 93 Registered: 11-2008 |
I agree Town. One thing the domestics need to do is capture the youth market again. My oldest girl drives(a used Accord we picked up cheap from a relative I hate to say) & almost all her friends drive imports. Nothing really fancy about them to be honest...most are 4cyl with basic creature comforts. It doesn't help that the "Tuners" purposely deride anything American made...Muscle Car guys hate them & vice versa. That aside, the Neon was hot for a while & could be tricked out. I saw several younger people driving them here at work. A few guys went all out with rims, spoilers, exhauste, etc. As the Allpar article I posted earlier states "Money was spent on a Crossfire replacement when we need a Neon replacement, and building the LX and JS to Mercedes architectures no doubt increased their weight and cost." That right there speaks volumes about the Daimler mindset that helped put Chrysler in the position its in at the moment. I can only hope that this Fiat scenario will be a positive one. They appear to have quashed the "Fix it again Tony" stigma & want to work with Mopar on their restructuring plan since they completed one a few years ago. I think back when the Dart & Duster were around(before the Volare/Aspen fiasco)...they were cars that were easily modified & really nothing more than affordable basic transportation. Put them in the hands of a 20something & he's mod'ing the engine, slapping on dual exhaust, a new set of rims & a kickass sound system. The domestics could use that as inspiration to build competetive small cars again. But what do I know? I'm just some dumb consumer. | ||
Mopardan Member Username: Mopardan Post Number: 94 Registered: 11-2008 |
Fury, I agree with your points about how Plymouth was positioned then repositioned. In comparison about options, think about the Roadrunner & Super Bee. With the Runner, you were lucky to get floormats let alone carpeting, while the SuperBee already had it; late 60s & probably not a good analogy for what you wrote. Competition between the two continued on with the E Bodies, which are highly coveted these days. Throw in the Charger/RR, Coronet/Satellite, Monaco/Fury & the lines start to become very blurred. From what I understand, Plymouth was near the top of the heap as far as sales until about the early or mid-60s. Trust me, it wouldn't hurt my feelings one bit to see a new Plymouth 'Cuda appear alongside the Challenger or RR with the Charger. | ||
_sj_ Member Username: _sj_ Post Number: 1633 Registered: 12-2003 |
Affordable is the key word. Affordable to everyone, not just employees is a hurdle they have yet to cross. No one likes fishing for a price and the Big Three do not make it easy unless you have an ID number. | ||
Jiminnm Member Username: Jiminnm Post Number: 1656 Registered: 02-2005 |
What's missing from the Time article is that Fiat also receives the right to purchase an additional 20% of Chrysler for the pittance of $25 million. I don't know if that's the 20% share that D-B still holds (at zero book value) or if it's from Cerebrus. A month or so ago, Cerebrus filed suit against Daimler claiming that D-B didn't disclose all the financial info and intentionally misled Cerebrus as to Chrysler's value. I'm not sure where that falls out in all of this. To make this deal work, Chrysler also has to pass whatever tests Congress deigns to apply for them to be considered a going concern (with a market value near zero that will will be interesting) and then borrow an additional $3-4 billion from the Feds. Bosch, there was no partnership with Daimler. Chrysler was a wholly owned subsidiary (regardless of the so-called partnership of equals, which never existed). Daimler sold Chrysler because they couldn't make it work and probably recognized that Chrysler was the weakest of a seriously weak US auto industry that would never enough cars to cover its costs. D-B took a huge hit (buying Chrysler for $35-37 billion and peddling it to Cerebrus for $6-7 billion and keeping a 20% stake). | ||
Mopardan Member Username: Mopardan Post Number: 95 Registered: 11-2008 |
This is interesting: http://finance.yahoo.com/news/ ND-lawmakers-want-tax-break-ap f-14115651.html North Dakota's Detroit bailout: A tax break for Ford, Chrysler, General Motors buyers Wednesday January 21, 2009, 11:30 am EST Yahoo! Buzz Print BISMARCK, N.D. (AP) -- North Dakota may be offering Detroit its own bailout. A group of six North Dakota lawmakers has introduced legislation to exempt new Ford, Chrysler and General Motors vehicles from North Dakota's sales tax and motor vehicle excise tax. The tax break would apply until June 30, 2010, to buyers of any new vehicles made by those companies. New vehicle leases would also get the tax break. North Dakota normally charges a 5 percent tax on motor vehicle sales and leases. Minot Rep. Lisa Wolf is the principal sponsor of the bill. Its first hearing in the North Dakota House has not been scheduled. | ||
Mopardan Member Username: Mopardan Post Number: 97 Registered: 11-2008 |
Editorial from yesterday's Detroit News. http://detnews.com/apps/pbcs.d ll/article?AID=/20090121/OPINI ON01/901210306 | ||
Cinderpath Member Username: Cinderpath Post Number: 931 Registered: 05-2006 |
The best of Italian engineering and Chrysler workmanship...... What could possibly go wrong? | ||
Fury13 Member Username: Fury13 Post Number: 2033 Registered: 10-2003 |
I'm excited about the possibility of seeing the new Fiat 500 and the Alfa Romeo MiTo -- fun, versatile, fuel-efficient designs -- in the U.S. They could even end up being built here. | ||
Dtowncitylover Member Username: Dtowncitylover Post Number: 457 Registered: 02-2008 |
I would love a Fiat Nuova 500. | ||
Mopardan Member Username: Mopardan Post Number: 104 Registered: 11-2008 |
Quote: The best of Italian engineering and Chrysler workmanship...... What could possibly go wrong? What were these guys thinking? http://nobelprize.org/nobel_pr izes/physics/laureates/1938/fe rmi-bio.html http://nobelprize.org/nobel_pr izes/physics/laureates/1909/ma rconi-bio.html http://www.engineering.com/Lib rary/ArticlesPage/tabid/85/art icleType/ArticleView/articleId /34/Leonardo-Da-Vinci.aspx While not thrilled about this non-binding agreement with Fiat, it's the only game in town. Let's hope it's not a Daimler repeat. | ||
Aiw Member Username: Aiw Post Number: 1879 Registered: 10-2003 |
For what it's worth, Fiat CEO Sergio Marchionne is a graduate of the University of Windsor. I think it's a great idea. Looking forward to buying a Fiat Panda. If there's one thing we need in North America it's small cars. No one over here understands how to build a small cheap car. Yet Europe is full of them.  | ||
Alan55 Member Username: Alan55 Post Number: 2552 Registered: 09-2005 |
Small, cheap cars in Europe? Small, yes. Cheap? not by a long shot. | ||
Aiw Member Username: Aiw Post Number: 1880 Registered: 10-2003 |
I beg to differ. A base Panda in England is 7,095 pounds. Converted that's $10,141.83 USD. That's cheap to me.  | ||
Mopardan Member Username: Mopardan Post Number: 106 Registered: 11-2008 |
If people will buy a Scion, they'll buy these. I bet it wouldn't be much to upgrade on options either. Just make sure they put the steering column on the left side. | ||
Ndavies Member Username: Ndavies Post Number: 1647 Registered: 10-2003 |
Under todays exchange rate that is true. But just 6 months ago the pound was closer to it's long term average. That car would have cost $15,000 at that exchange rate. Also you're forgetting the extra shipping costs and the conversion costs to North american regulations. Those Federal regulations add costs to that vehicle. | ||
Otter Member Username: Otter Post Number: 513 Registered: 12-2007 |
It is, broadly, true that small cars in Europe are expensive by the standards that Americans are used to, but this is true for cars in general, not just small cars. The notes about the exchange rate are true, but pricing of an equivalent car in Europe and the US don't tend to have much to do with each other. Lastly, the UK has, I think, the highest car prices in Europe. O. | ||
Aiw Member Username: Aiw Post Number: 1881 Registered: 10-2003 |
True Ndavies, but you know as well as I, a pound is spent the same as a dollar. What costs $5 in the US cost 5 pounds in GB. | ||
Mopardan Member Username: Mopardan Post Number: 109 Registered: 11-2008 |
From the Allpar site. http://www.allpar.com/news/ind ex.php/2009/02/press-chrysler- can-make-it-without-fiat/ Press: Chrysler can make it without Fiat February 4th, 2009 by Bill Cawthon Chrysler Vice Chairman Jim Press says the company can survive with or without Fiat and intends to present two alternative viability plans to the federal government on February 17. Company executives did say the alliance is the preferred route and added that discussions with other potential partners have been suspended. The government has to approve a Chrysler plan in order for the car company to receive the remaining $3 billion from its original request for $7 billion in loans. Press commented “we don’t have to have a partner or Fiat to gain the $3 billion.” The proposed Chrysler-Fiat alliance has received a generally positive response from the investment community as the best option for survival as it provides much-needed new product that Chrysler may not have the resources to develop on its own. | ||
Mopardan Member Username: Mopardan Post Number: 123 Registered: 11-2008 |
From the AllPar site. http://www.allpar.com/news/ind ex.php/2009/02/chryslers-plans -detailed/ Chrysler’s plans detailed February 11th, 2009 by DaveAdmin Writing for the Associated Press, Tom Krisher interviewed Frank Klegon regarding Chrysler’s twin business plans, one including Fiat and the other standing alone. He wrote that two teams were independently working on the plans. In either case, Chrysler plans to provide equity to bondholders to get concessions from them, and is talking with the UAW on labor costs. The company is currently trying to get dealers to order 78,000 vehicles in February, and is still short by 10,000 vehicles with a deadline looming. Klegon noted that while Chrysler is interested in Fiat’s small cars and powertrains, Fiat itself is interested in Chrysler’s trucks, emissions controls, and the Phoenix V6. One interesting part of the article concerned the deal with Nissan to build a car (usually thought to be the Hornet) on the Cube architecture. This is still ongoing, according to Klegon, despite the obvious duplication with the Fiats, but he said there was no signed contract with Nissan. Even with the Fiat deal, the Hornet could continue. | ||
Mopardan Member Username: Mopardan Post Number: 128 Registered: 11-2008 |
Chrysler official: No Fiat deal closing by Tuesday http://finance.yahoo.com/news/ Chrysler-official-No-Fiat-apf- 14356272.html DETROIT (AP) -- The deal for Italian automaker Fiat SpA to take a 35 percent stake in Chrysler LLC will not be finished until after Chrysler submits a restructuring plan to the federal government, a Chrysler official said Friday. But the official, who did not want to be identified because the automaker is still working on the plan it must provide to the Treasury Department by Tuesday, said Chrysler will show how it can be viable as an independent company as well as with Fiat taking a stake. Chrysler is living on $4 billion in government loans. The restructuring plan must show how the automaker will repay the money and become viable. If the government approves the plan, Chrysler will get another $3 billion in loans. The Fiat deal is contingent upon that happening, the official said. The automakers said last month that they have a nonbinding preliminary deal for Fiat to give its small-car technology to Chrysler in exchange for a 35 percent stake in the struggling automaker. Chrysler's current small and midsize vehicle lineup has not sold well, and it lacks a subcompact model that Fiat could provide. Chrysler has said that Fiat's vehicle architecture and engine technology are worth billions and would allow Chrysler to get small cars to market five or six years faster than Chrysler could on its own. Fiat also would get access to Chrysler's U.S. distribution network and its emissions control and large-vehicle technology. The official said Chrysler is still negotiating concessions from debtholders and the United Auto Workers union, even with the deadline to file the viability plan with the government only four days away. Negotiations are to continue into the weekend. General Motors Corp., which also has received government loans to hold off a bankruptcy filing, is working on its own plan under the same deadline. GM has received $9.4 billion in loans and hopes to get another $4 billion when its plan is approved. Under the terms of Chrysler's loans, the government set a target for the company to swap much of its debt for equity, which will severely dilute the ownership stake of its current owners, Cerberus Capital Management LP and Daimler AG. Chrysler will negotiate into the weekend with banks that hold its secured debt to swap part of it for equity. The government also wants Chrysler to convert to equity billions in cash payments it must make to a trust that will start paying retiree health care costs next year. The government also will get equity for its loans. Those moves, coupled with Fiat's potential 35 percent stake, could leave Cerberus and Daimler with combined ownership of less than 10 percent, according to independent auto industry analyst Erich Merkle. "My understanding is it would be the banks and the UAW that would own the company when they're done. They would be the larger stakeholders," Merkle said. Currently, Cerberus, a New York private equity firm, owns 80.1 percent of the struggling Auburn Hills automaker, while Daimler, Chrysler's former owner, holds 19.9 percent. Cerberus is negotiating to take the Daimler stake. Since Chrysler is a privately held company, it's unclear just how much debt the automaker has, but officials have said it is secured debt held by banks. Chrysler is obligated to pay about $9.9 billion into the union trust under the terms of a national contract deal reached with the UAW in 2007. That payment relieves the company of a $16 billion long-term liability for retiree health care. The union gained federal court approval for the trust and plans to invest the money so it can pay health care costs for current and future retirees. General Motors Corp. and Ford Motor Co. also agreed to similar trusts in their union contracts. Chrysler spokeswoman Shawn Morgan would not comment other than to say that the company continues to work with its stakeholders. Both Chrysler and GM must prove they will be able to repay government loans and achieve "positive net present value." That means that the present value of a company's expected net cash flows exceeds the initial investment that must be made in the company. Ford has borrowed enough cash privately and says it can avoid government loans. Nearly all automakers are reporting dismal sales in what has turned out to be the worst auto sales climate in 26 years. Chrysler Vice Chairman Jim Press said Thursday that negotiations with the UAW and banks will continue into the weekend. He said full settlements with the stakeholders don't have to be reached until March 31. Although a Fiat deal would mean Italian company owns 35 percent of the company, it would still create American jobs, justifying the loans, Press said. With the Fiat deal gaining momentum, Nissan Motor Co. of Japan said Friday it has suspended plans for Chrysler to produce a Nissan pickup truck and Nissan to produce a small car for Chrysler. | ||
Peachlaser Member Username: Peachlaser Post Number: 274 Registered: 08-2006 |
This means that Chrysler may do something that Henry Ford could not do...own Ferrari. |
