No one wants to be stuck with an orphan. Just ask anyone who owned an Eagle.

What is missing here is the recognition that the combination of GMAC and CFC really makes CG irrelevant. Cerb got CG for free…a call option on a marginal business/industry.

Yes, the subprime hit at GMAC is a mess, but the losses are equally absorbed by GM. BFD.

The play is to stabilize the cflo at CG, and plan for a boffo IPO on the financial side when the market eventually turns.

CG? Sale to third party….Nissan, Hyundai, the Chinese.

My $.02

This is all a classic case of owners lying to everyone at the company about their intent. While they are busy telling workers, suppliers, unions, and investors one thing they are quietly planning an entirely different plan.

But that is business and capitalism. While we may want the government to do something or a different outcome to occur, the law of the jungle applies. Even to has been car makers.

But Mopar performance doesn’t offer anything unique. There are dozens of companies offering aftermarket parts for vintage and current Chryslers, including blocks and crate engines. They won’t get much for this…not enough to make a difference.

Pity, but yes, I think this is ‘the end’.

That is an old story amongst Jeep fans.

Chryslers problem is their product is not competitive. The Sebring, Compass, Commander? What were they thinking? The Wrangler, the 300 maybe some of the other Jeeps are up to standard and the and the rest of the lineup is rental market specials.

Willys -> KAISER -> AMC -> Renault -> Chrysler -> Daimler-Chrysler -> Chryslerberus

Sure looks like a jinx, doesn’t it?

I like that…we can call it “The Race to the Finished Line”

Yep, as soon as the truth about Chrysler hits the general public in the face, the gig is up. Who’d want to buy an unsupported product when so many other alternatives are out there? And, unfortunately, it seems that once one dam bursts, the ones downstream don’t have much of a chance either. Ford and GM will be under strong public scrutiny once Chrysler keels over. Spin and politics are like bubble gum on the radiator hose.

One primary reason I believe that Cerberus will want to create this outsourcing-based model is because that sort of structure would fall very much in line with the way that private equity firms do business.

PE firms aspire to achieve high returns for their investors. They generally buy companies that have good potential but bad managers. They exploit the brand equity of the company, replace the bad managers with good ones (many of whom are probably outsiders), cull the dead weight and try to make the organization more efficient.

One basic way to achieve efficiency is to reduce your business down to a few basics, and to focus on doing those few basics that create the most value. The rest of it gets punted or outsourced (which, by the way, doesn’t necessarily that it goes overseas, just that it is delegated to another company.) In other words, instead of trying to do everything and doing it poorly, just do a couple of things, but do them very well so that the margins are good.

PE firms also try to do a lot with a little. They look for OPM (Other People’s Money) to help distribute the risk. For a company this large, forming partnerships to put individual projects together makes a lot of sense, because the partner is geared up to do it, and can bring cash and expertise to the table to do it better and faster than you could without them. This not only stretches scarce dollars further, but it also brings in useful resources that would not otherwise be available to you.

Because of this methodology, PE firms are very quick to outsource the low-value areas of the business. My guess is that they Chrysler mostly as a brand-potential play, and that a lot of the infrastructure doesn’t create much value was always targeted for outsourcing.

Chrysler wasn’t exactly known for technological innovation or brilliant design, and I seriously doubt that Cerberus bought the company with the idea that these were among Chrysler’s strengths. In financial terms, they cost money to support but don’t create profit, so why keep them? When viewed from a private equity standpoint, these have outsourcing written all over them.

The next question is whether it will work. Personally, I doubt it. In my opinion, the Big 2.8 have such dysfunctional corporate cultures that it will be difficult to turn Chrysler on a dime. The product cycles are too long to reinvigorate the brands very quickly. Finding these necessary venture partners will be difficult.

And the backbone of their plan — expanding into developing countries — won’t be a walk in the park because several of their competitors already have a head start. This whole thing could suck up a lot of Cerberus’ cash, plus ten years or more to accomplish. I doubt that they have the time, money, or stomach for something that will take that long.

Their only hope would be to have some outfit buy them up for the purpose of using their production facilities, and would such a corporation want to assume the exisiting liabilities such as warranties? You could alienate a lot of people very quicky if you didn’t.

Respectfully, I don’t think outsourcing design will add much cache. Only pistonheads know what Pininfarina, etc. are. (Didn’t Ghia do some designs for Chrysler in the ’50s? )

The only advantage would be the designs might improve, and that would be worth something in itself.

Katie: I thought you were happy about Nardelli when he first arrived at Chrystler…

Huh? Where in my post did I say I changed my mind? I’m still happy Mr Nardelli will cut out the deadwood. But if even he is saying “My work is really cut out for me here!” then, maybe we have to acknowledge, that Chrysler’s survival is as likely as the Easter Bunny and Father Christmas…….?

People expect a bit of avant-garde design from Chrysler: think about the original minivans, cab-forward design in the nineties, the Prowler, the PT Cruiser, the Magnum, the 300… superficial or not, people buy them because they’re distinctive. Bringing the world’s best designers on board would solidify this reputation.

In the meantime, pumping out V8s for Nissan and minivans for VW definitely shows manufacturing flexibility and profitable use of surplus assembly-line capacity.

Boot’em and strip’n'flip aside, Cerebrus is smart enough to know that they can’t cut their way to prosperity… their actions demonstrate that.