By on November 7, 2008

Slipped that one in, eh? The official statement, via The Detroit News: “GM has recently explored the possibility of a strategic acquisition that it believed would generate significant cost reduction synergies and substantially strengthen GM’s financial position in the medium and long term, while being neutral or modestly positive to cash flow even in the near term. While the acquisition could potentially have provided significant benefits, the company has concluded that it is more important at the present time to focus on its immediate liquidity challenges and, accordingly, considerations of such a transaction as a near-term priority have been set aside.” To which Chrysler CEO Boot ’em Bob Nardelli responded, “”Chrysler LLC neither confirms nor discloses the nature of its private business meetings, as many times they do not come to fruition. Returning Chrysler to profitability continues to be the key focus of the management team. We are significantly challenged by today’s economic environment and by the automotive industry’s unprecedented downturn. As an independent company, we will continue to explore multiple strategic alliances or partnerships as we investigate growth opportunities around the world that would aid in our return to profitability.” Good luck with that, then.

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28 Comments on “GM: No Chrysler Merger...”


  • avatar
    Ingvar

    Funny how many weeks it took them to understand the bleeding obvious…

  • avatar
    billc83

    Hallelujah!

    How this near-debacle got on the table is beyond me. It would be the Roseanne Barr of business decisions – wrong from every angle.

  • avatar
    Pch101

    Translation: GM wanted the cash in Chrysler’s coffers, but Cerberus’ main motivation for doing a deal was to keep that cash. Not much point in doing the deal when both sides are playing tug of war over the same pot of money.

  • avatar
    jkross22

    “We are significantly challenged by today’s economic environment…”

    This quote is incomplete – let me help:

    “And the high quality loans we made to people already upside down in their trade-ins. Also, we fudged a bit on the residual value of our wonderful trucks (and car) we leased. And we’re also challenged by public perception, poor leadership, bad investments, and a culture of mediocrity and laziness.

    Sorry about that.”

  • avatar
    J.on

    jkross22,

    You forgot: Horrible design, crappy interior quality, and unbelievably bad build quality.

  • avatar

    wonder how much we paid JP Morgan Chase for their “advice” on that one? add it to the amount we paid for advice on not buying Nissan and you get an idea why we’re broke. they don’t call him Red Ink Rick for nothing.

  • avatar
    CarnotCycle

    Ah shucks, the Pontiac Sebring G4.3 isn’t going to happen? Damn! Back to the drawing board…

  • avatar
    John Horner

    Grrrr, ruff, ruff, grrrrr … Cerberus remains in the yogurt on this one. Back to parting it out?

  • avatar
    autonut

    Robert, is this the big announcement that was suppose to happen or the fact that they pissed away few more billions? What’s the big announcement?

  • avatar
    NickR

    So, now that the GM merger is well and justly buried, who will emerge (re-emerge) as the next potential partner, if anyone? Nissan/Renault?

  • avatar
    blindfaith

    Cerberus has the money to help with the merger to Nissan and get the liability off their backs.

    Cerberus cannot envision actually trying to have a successful automotive company.

    All they wanted to do was strip money out of Chrysler and run

  • avatar
    Pch101

    Renault-Nissan has made it clear that it is not interested in a merger. A partnership would work, but the company probably doesn’t want to absorb all of the baggage that is associated with a merger.

    My guess is that Cerberus will sell it at a loss. If they have to part it out, they will, but my guess is that they’ll sell the whole thing, with the possible exception of the financing company. As the clock ticks, expediency will take priority over price.

  • avatar
    RedStapler

    I still thing the most likely scenario will be a parting out. The parts of Chrysler with value find homes.

    Absent the $50B and counting government intervention Chrysler was headed for certain bankruptcy. President Obama and Co. may shovel yet more cash into the burner.

    Jeep will end up coming “home” to Renault/Nissan.

    R/N already has a piece of the action with their badge engineering of the Ram Pickup. Scraping Chrysler lines of cars and using the sales channel for Nissans has potential.

  • avatar
    MOSullivan

    “We are significantly challenged by today’s economic environment and by the automotive industry’s unprecedented downturn. As an independent company, we will continue to explore multiple strategic alliances or partnerships as we investigate growth opportunities around the world that would aid in our return to profitability.”

    They never give up on the crap speak do they?

    I imagine this means cold calling auto companies and asking: “Say, do you have anything we could sell on commission? Because we sure as hell don’t have anything people want to buy and we, like, you know, really really need stuff to sell and we know you’d like to get into the US market and we’re the agent with the gold plated reputation you need to do that. What you need is a Chrysler badge on your Pressedsawdust GTXLSS and we’ve got lots of those. Can we talk? No? Are you sure? You are? Is there anybody else near you building cars I can call?”

  • avatar
    dean

    Whomever at GM “believed would generate significant cost reduction synergies and substantially strengthen GM’s financial position in the medium and long term, while being neutral or modestly positive to cash flow even in the near term” is smoking some seriously potent stuff.

  • avatar
    volvo

    Nickr asked

    “So, now that the GM merger is well and justly buried, who will emerge (re-emerge) as the next potential partner, if anyone? Nissan/Renault?”

    You Nick! You are the winner (assuming you are a US taxpayer). It’s a special kind of partnership. No messy stock certificates to keep track of and your dividend payments will be direct deposited to your UAW account.

    You probably thought investing was much more difficult. A side benefit of the current economic restructuring is you will become part owner of some major US corporations.

    Older TTAC members will realize the “Big Rock Candy Mountain” is just around the next bend.

  • avatar
    Detroit-Iron

    Where can I get one of those hood ornaments?

  • avatar
    cRacK hEaD aLLeY

    Today I learned something new, like I do [almost] everyday:

    “Cerberus is chaired by a former Bush administration Treasury secretary, John Snow, and its board includes Dan Quayle, who was vice president under former president George H.W. Bush.”

  • avatar
    NickR

    If Chrysler does get parted out, wouldn’t it have to declare bankrupcy first? If not, wouldn’t its existing liabilities travel with whoever buys that particular ‘cut’? Where’s that bankrupcy lawyer when I need him?!

  • avatar
    peteinsonj

    Nah, I believe by now the 3-headed dog folks have found ways to insulate and disaggregate all the various parts, e.g., a real estate holding company “owns” the factories, another shell owns and leases back the machinery, there is a separate design unit, probably a marketing company, and the brand names themselves, are in another entity.

    In the end, they won’t sell “Chrysler, LLC” — that will simply die in bankruptcy court along with the union’s VEBA interests. But they will sell all the individual pieces, which Tata, maybe Renault will pick up for a song.

    I am SURE they have this all figured out.

  • avatar
    autoemployeefornow

    When Chrysler bought AMC to acquire Jeep they bought all the other crappy baggage as well. Remember the Alliance? Seems to me it would be somewhat difficult to buy the pieces and leave the rest. Automakers usually buy companies don’t they? The baggage can later be jettisoned but not immediately.

  • avatar
    Blastman

    It’s hard to imagine anyone really wanting Chrysler in this poor economic climate. Probably not even part of Chrysler — like Jeep. From any other auto manufacturers POV, they would be better off to see Chrysler go under — meaning less competition and perhaps a bigger slice of the pie for them.

    This may actually be good news for Chrysler. If Cerberus can’t sell it, they may have to actually make a good effort at turning the company and product line around.

  • avatar
    Usta Bee

    The idea of Chrysler selling rebadged Nissans is funny considering Chrysler’s reputation for quality. Just by slapping a Chrysler badge on a Nissan you’d be looking at anywhere from $2000-$5000 off the resale value of the cars. It’d be good for used car shoppers that can’t afford Nissans though.

  • avatar
    no-versa

    Chrysler could supply trucks for Nissan easily. Nissan and Chrysler deserve each other. Believe me, as a multiple Nissan owner, Nissans are no picnic to own. I am familiar with the service departments of all of my local Nissan dealers.

  • avatar

    I heard that Hyundai stepped in for talks. True?

  • avatar
    ronin

    Not sure why we’re talking about Chrysler mergers as though it has anything to do with people actually buying cars.

    What instead would be up for sale is the name of a company. It is essentially paper being moved to someone who thinks it is a get-taxpayer-money-for-free card. Which it probably is.

    Is it worth spending $n billion for a name that may well get $m billion in taxpayer bail-out money this year (and the year after and the year after and the year after)? Not a bad gamble.

    The cars? Just camouflage, to make it look as though Chrysler were actually a going concern. Who cares if anyone actually buys them. Along the lines of: http://en.wikipedia.org/wiki/Potemkin_village

  • avatar
    windswords

    Usta Bee & no-versa:

    Just a few years ago Chrysler consistently scored higher than Nissan on both the JD Powers initial quality and 3 year studies. I don’t know what the scores have been the last 2 years. Nissan has always basked in the glow of Toyota and Honda as has Mitsubishi. Neither of those companies made as reliable cars as Toyota, Honda, or even Chrysler. When Chrysler was taken over by Daimler they had better reliability than Mercedes but Daimler thought they could teach the poor Americans about building “reliable” cars. So they instituted Mercedes style quality control at Chrysler. Chrysler reliability got worse. I hear it’s better now that the Germans are gone.

  • avatar
    AlphaWolf

    windswords : Exactly. I keep telling people about Daimler making Chrysler worse, most people do not realize this.


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