No more gas guzzling, Mexican made hemis! No more lousy transmissions that fall apart at 30K!

What a cruel world!

Dodge dealers offering buy one get one free

Seems pretty desperate.

Let’s crush them. Crush them all. The overcapacity is so bad that my local dealer still has two new 2007 300s on the lot which remain unsold. Pathetic.

Grind them all up and put them on boats headed for South Korea. They can come back to us as Aveo.

1. What is the value of this complex to another company?
$0.00 – There’s too much overcapacity in North America – even for a modern plant.

2. Which non-Chrysler auto companies would find this complex worth buying, assuming that UAW contracts weren’t part of the package?
Your question assumes a functional plant with non-UAW employees can actually be run in Fenton. I doubt that assumption. Feel free to speculate on possible legal and other production disruptions.

3. If no auto company wanted this plant, to what other kinds of manufacturing could this plant be converted without throwing away all the machinery?
Nothing. If the plant sold very cheap, it’d be best to flatbed the machinery to another location. Or, mothball the whole thing until government is willing to bribe youtax-incentives and grants make it viable to re-open.

Now, things might have been different had Chrysler actually managed to “do an end run” around the competition with their last mid-sized car. Instead of a fumble.

Imagine the value of the company if it had a
GENUINELY 1st class Accord/Camry fighter – with similar reliability, capabilities, competitive styling, better than average fit and finish and materials, “next size” interior and trunk, good comfort levels, decent handling and decent styling. Oh yes – with competitive pricing – and MANUFACTURED in the United States. Oh yes, finally, with a first class, very long warrantee.

I just described the Hyundai Sonata.

Chapter 11 is difficult, however, because this isn’t the 1980s. Customers have more choices today than they did then, and it will be tough for them make their second largest purchase from a company in bankruptcy. Especially in this economy.

I think a sale or merger with GM or Nissan is more likely. Cerberus wants OUT. We were all put on notice when Cerberus hired cut-and-run Nardelli over product guy Werner Bernhard in the beginning.

Missed that one. Thanks. Text amedended.

Either that, or I’m going to hire a Cuban mechanic to keep it running.

-ted

As a concrete example, let us ponder Chrysler’s twin plants in Fenton, MO (suburban St. Louis). The recently-shuttered south plant produced minivans, while the north plant is slated to run one shift building Dodge Ram pickup trucks. While the Fenton complex has been around for decades (30+ years, since I can’t remember it not being there), DaimlerChrysler spent about $500 million modernizing the complex since 2005. I’m not sure of the capacity, except that St. Louis South employed about 1500 workers for one shift, and the next-door North employs about 900 workers for one shift.

All that being said, four questions occur to me:

1. What is the value of this complex to another company? I assume that a recently-modernized plant, while having some tooling that is model-specific, has some tools (e.g., robot welders) that can be adapted to produce other vehicles.

2. Which non-Chrysler auto companies would find this complex worth buying, assuming that UAW contracts weren’t part of the package?

3. If no auto company wanted this plant, to what other kinds of manufacturing could this plant be converted without throwing away all the machinery?

My fourth question may be beyond the scope of TTAC’s B&B, as it involves political issues, but here goes:

4. How would money, in tax breaks and the like offered by Fenton, St. Louis County and the state of Missouri, affect both the value of this complex and the likelihood that some auto company would buy it?

You have reinforced my point. Regardless of how Daimler “gutted this fish”, Cerberus knew what they were buying. IF Cerberus’ intententions were simply to “carve it up” then they have indeed lied to the buying public that spent good money on the products Chrysler was selling. Pure greed and a lack of ethics is at play here. I agree Daimler screwed this company, but, that is no excuse for how the customers and employees of Chrysler are being screwed over again.

This dog won’t hunt. Too many dealers. Union contracts suck. Products blow. Corporate culture diseased. Massive liabilities. Anyone who’d be stupid enough to sink money into the Chrysler sinkhole will never see it again. Which is why Cerberus didn’t bother, and never planned to.

Daimler– or the people who sold Chrysler to Daimler– gutted this fish. Cerberus merely carved it up. Or will do, ASAP.

I would take it the Rams for Nissan and MiniBus for VW are a part of that plan ?

It didn’t seem like they got much of anything from Daimler in the first place. And it would seem that even that plan would have taken more capital and time to get the outfit strong enough to sell than they wanted.

Seems like an awfully risky way to “invest” as the Big 2.8 were having problems long before Cerberus got in the game.

Was there any product planning by Cerberus
beyond 2010 or was Cerberus aiming to have been done with Chrysler and on to other things by then ?

Oddly AMC was building cars for Chrysler there at Kenosha, both M Body and the Omnirizon at different points IIRC before the merger and after.

I also agree that bad companies (and their union) cannot be allowed to survive.

Americans have decided to throw capitalism over the railing, because “it’s too harsh”. We don’t believe in loser having to pay the price anymore. Welcome to American socialism.

No. Chrysler LLC’s pieces aren’t worth much of anything. There wasn’t anything to strip and flip when they acquired it. Breaking up the company without first building it up and making it better would have been a sure money loser.

It’s fairly clear from Cerberus’ actions that their goal was to turn Chrysler into a distributor of cars made by others, while Chrysler would in turn build trucks and minivans that it would sell to others who wished to rebrand them for themselves.

The logical play would have been to create relationships with these other auto companies that were deep enough that the eventual sale of Chrysler would create a bidding war among the existing JV partners, plus possibly some outsiders who wanted a foothold in the US market.

It’s clear that Cerberus didn’t see this credit crunch coming. The current situation is difficult because it adds years to their exit strategy and it limits their ability to borrow money to pay for the buildup.

They probably also planned on helping to pay for the growth of the new Chrysler by selling off the inventory that they inherited from Daimler. With sales dropping and prices falling, that can’t be going as well as planned, either.

Since they don’t want to fill those money gaps by exposing themselves with more of their own or their investors’ money, they’d prefer to sell now while they have a chance to recoup something.

They are going to take a bath on this one. This is surely not something that they projected or really wanted.

Whats the chance this is where the government bails out Chrysler and takes an ownership in it? I’m sure Goldman’s and JP’s interest in Chrysler would be eligible for the government to buy under TARP. We know ex-goldman exec Paulson would love to take that problem off their hands. I’m sure the politicians could all get behind this too.

Of course that means that the bigger schmucks are now the taxpayers, but that won’t be any different from the rest of the bailout

They weren’t getting into the car business because they were “car guys “….. like Lutz …..

Do you really think they wanted to take the Sebring and Caliber to the “next level ” ?

Someone may want Jeep. The other two only have sentimental value as brands.

At the right price, somebody will want Chrysler. That price will likely be much less than what Cerberus would like it to be, but they have few options and everyone knows it.

The same potential that made it appealing to Cerberus should make it appealing to someone else. The tough part is the credit crunch — Cerberus may have to help finance a part of the sale themselves in order to get it done, just as Daimler effectively for them.

Why waste that kind of time unless they are positioning for a sale of some sort?

VW, Nissan or a Korean maker.