By on February 4, 2009

Not buyers of Dodge Vipers per se. Some 127 of them found their way to a Dodge dealer in January, a 74 percent gain from last year’s total. Of course, that may have a little something to do with the fact that A) Dodge dealers are dealing as if their life depends on it (which it does) and B) the chances of buying a new Viper are decreasing by the minute. Especially since Chrysler revealed that it wants to sell the model as a brand to . . . someone. Oh how we laughed! Well, not Autoblog obviously, despite having reported that American tuner Saleen was a suitor (after having reported that Saleen’s busy going belly-up). I mention this not because I’ve been dying to put the boot in to Autoblog ever since my reader-inspired vow of fraternity, but because it raises the obvious question. Is Chrysler lying when it told the MSM that it has three companies interested in buying its Viper tooling and trademarks? (Setting aside the question of whether or not Cerberus has already mortgaged these “assets.”) Here’s AB’s take:

When the announcement was initially made that the automaker was considering offloading Viper as a brand, the prevailing thought was that the move could save the car from extinction. Now, the tables have turned and it’s generally acknowledged that Viper’s sale may actually help save its struggling parent company. The income from selling the sportscar unit could help bolster the report due to Congress by the end of March regarding Chrysler’s long-term viability, but the automaker doesn’t expect to have anything finalized by D-day.

Coincidence? I THINK NOT. How easy is it to say “we’ve got three buyers lined up?” ”We’re doing due diligence,” Jim Press said in yesterday’s conference call. I would love to see the bona fides of these potential Viper builders. But then it’s not like I loaned Chrysler $7b. . . .

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25 Comments on “Is Chrysler Lying About Viper Buyers?...”


  • avatar
    Seth L

    Oh great, North America’s TVR, right here.

    Although, do Russian ‘bankers’ sons still have money?

  • avatar
    Justin Berkowitz

    I think the Viper program makes an appealing buy, if any suitor actually has the cash.

  • avatar
    Lokkii

    Well, more than 40 years later, somebody is still cranking out new Avanti’s (in a basement?) somewhere, and there are dozen’s of kit-”Cobra’s” out there, so, yeah…. somebody is interested in buying the tooling for Vipers.

    And the best part is that, in 5 years, you’ll be able to get a new Viper that has a small-block Chevy engine in it!

  • avatar
    Airhen

    Chrysler has had some decent vehicles. But they have also had plenty of throw away vehicles that were poorly designed and managed that damaged their brands. Not to mention that they were built by exploitative unions.

    I don’t see that selling the Viper is going to save the company. Sell the vehicles that matter to small startups that would be free of the unions (and their bought and paid for politicians) and sell the assets to pay off their debts and agreements. Otherwise Chrysler will be a nationalized company where profit and quality products do not matter, just providing jobs to Paul at the expense of Peter. D-day will be interesting to watch…

  • avatar
    no_slushbox

    Chrysler simply needs to make some simple modifications to its tired, whiny old excuse:

    “Many more consumers companies wanted to buy a vehicle the Viper brand than could qualify for financing under the current credit conditions.”

  • avatar
    06M3S54B32

    Good luck Dodge. When I think of any Dodge product I remember the Married with Children episodes with Al Bundy pushing his POS into the garage. Any Dodge needs to cast under $15K to make any sense.

  • avatar
    Jared

    Certainly Chrysler should sell off Viper, because they need every dime they can get. But the proceeds will not significantly help Chrysler’s bottom line — it will just be a drop in the bucket. They sell less than 1000 Vipers per year, so I can’t see them getting even $100M for the Viper franchise. Chrysler needs billions, not millions.

  • avatar
    AKM

    Although, do Russian ‘bankers’ sons still have money?

    Probably not much. With the fall in commodities prices (as well as most other assets, really), oil-producing countries really hurt, and deficits are increasing in Russia and Iran, among others.

    I’d actually be curious to see how the Russian luxury car market is faring nowadays.

  • avatar
    akear

    Chrysler should go into the business of selling lawn tractors.

  • avatar
    70 Chevelle SS454

    Al Bundy had a 74 Dart. Actually, if it had the 340 in it, that’s a pretty cool little car.

  • avatar
    rpol35

    Jared beat me to the punch. The Viper “franchise” is worth $80 – $100 MM tops; a drop in the ocean of red ink that is drowning Chrysler, LLC. It might help pay a couple of “big-head” executive salaries about that’s about it.

  • avatar

    Incidentally, I have a message to any Dodge dealer that is “dealing as if their life depended on it” on the 600-horsepower ACR:

    You know my name, look up the number.

  • avatar
    Robert Schwartz

    If Al Bundy had a 74 Dart with a slant 6, he wouldn’t have been pushing it.

  • avatar

    Jack Baruth: “Dealing like their life depended on it” = gouging customers and wringing every penny profit out of the sale as possible, NOT ‘making stellar deals for the customer.’

  • avatar
    NickR

    $80 – $100 MM

    No way. The value of business is the net present value of its future free cash flows. Given the uncertainties in the economy (to put it mildly) most companies won’t even consider anything beyond 3 years (5 years if you are either very stupid or daring). Viper will not generate $80 to $100 million in cash flows.

  • avatar
    Detroit-Iron

    Tell Nardelli I’ll give him $20 for it. I wonder if the next press release will say there are now four buyers interested.

  • avatar

    Jack, you’re not old enough to remember that Beatle b-side.

    Let’s say they can sell 1,200 Vipers @ $80K. That’s about $100 million a year. Someone should be able to make a business out of that. I don’t know how much of the car besides the engine Chrysler makes. Chrysler just designs and assembles the car. Vendors supply subassemblies and major components to the assembly plant. The body panels come in already painted. So another company could continue production. Chrysler could sell the Conner Street assembly plant. Or a buyer could just buy the line and put in somewhere else. The Saleen facility in Troy, MI that did final assembly for the Ford GT is available.

    Isn’t it amazing how Steve Saleen managed to bail on the company he founded just as it was about to crash?

  • avatar

    Ronnie Schreiber:

    MSRP: $88,590-89,340
    Invoice: $81,090-81,757

    So, let’s say (just for laughs) there’s $10k profit in each Viper. $10k X 1200 = $12m. That’s probably the development budget for a 911′s engine. For one year.

    Double it. $24m. Triple it. $36m.

    There’s no money in this thing. Just let it go.

  • avatar
    rpol35

    One of the Investment Banks came up with the $80 to $100 MM based on 5 times EBIDTA assumming 1,200 cars x $15,000 earnings per unit X 5 years. Chrysler assummed about $100 MM but the bankers (for what they are worth these days) said more like $80 MM. Since the Viper is really a 1992 design, I guess most of the R&D is depreciated.

    I’ll see if I can find the article that gave the details.

  • avatar
    rpol35

    This is the post from an analyst at CSM Worldwide that stated $100 MM for the Viper but there was another floating around that stated $80 MM.

    http://www.moneymorning.com/2008/08/28/chrysler-considers-sale-of-gas-guzzling-viper/

    Kevin Tynan, an analyst at Argus Research stated $140 MM to $150 MM but he’s dreaming of swamp property in Florida me thinks.

    http://www.usatoday.com/money/autos/2008-08-27-viper_N.htm

  • avatar
    NickR

    That’s about $100 million a year.

    That’s revenue. That means very little. Cash flow is king…or it should be for any wise investor.

    Using a discounted cash flow model, assuming $1,200 models per year at $15,000 profit free and clear for 5 years at a weighted average cost of capital of 5% yields a value of $78,000,000. Keeping all else the same and a) Shorten the forecast to 3 years and it’s worth $49,000,000, b) Reduce the profit to $10,000 each and it’s worth $52,000,000 or c) Reduce the volume to a 1000/yr and it’s worth $65,000,000.

    In short, it doesn’t take particularly grim scenarios to see a sharply lower price. Throw in warranty liabilities as a confounding factor and it would take a stout heart to pick this up.

    The only real salvation scenario I see is if the potential buyer can get the rights and tooling to both the iron block and aluminum block versions of the V10. And the would-be buyers of the Ram truck line might make that as a stipulation of their purchase (I would).

    I don’t see it happening at the stated prices.

  • avatar
    TheRealAutoGuy

    Is Chrysler Lying About Viper Buyers?

    No.

    Sometimes, there is no conspiracy.

  • avatar
    heaven_on_mars

    Considering the pace of technology, the Viper is already semi-dated tech. Yes their barely street legal racer edition is very fast, but there is nothing to high tech about it. If anyone would be a fit for ownership would be a company like Factory Five. The Viper is like their Cobra Daytona replicas, a niche market car that for exotic car buyers is often not exotic enough and for many muscle car buyers, a little heavy on the price.

  • avatar
    CommanderFish

    The main thing about the Viper now is it’s (probably) a money losing operation for Chrysler right now. Selling the Viper will let them kill two house flies (not big enough to be birds) with one stone: Less expenses, and you got some spare change out of the deal.

    I can’t imagine who’d really want this, maybe another sports/exotic brand who wants to add something to their stable on the cheap? I don’t see how the V10 is going to fit into this either. I predict that if somebody does actually buy up the Viper they’ll use their own engine.

    Oh, and location of assembly doesn’t mean squat for the Viper. It’s hand-made.

  • avatar
    Lokkii

    Who’s going the be the Viper dealer? Still sold through Chrysler? Who stocks the parts?


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