By on May 1, 2009

No, really. The Detroit News reports that prior to its Chapter 11 filing, Chrysler sought to sell off parts of the company to everyone. “Chrysler sent letters to parties, primarily in China, whom we thought would be potentially interested in purchasing our assets,” writes ChryCo’s Tom LaSorda in a bankruptcy filing affidavit. “Over the next two months, several companies, including Beijing Automotive Industry Holding Co., Tempo International Group, Hawtai Automobiles, and Chery Automotive Co., expressed interest in purchasing specific vehicles, powertrains, intellectual property rights, distribution channels and automotive brands.” But guess what? Not even these ambitious firms were tempted to spend a dime on Chrysler’s alleged assets. And the major OEMs in the global auto game? Chrysler’s efforts to form alliances with Nissan, GM, Volkswagen, Tata Motors, Magna, GAZ, Hyundai, Honda and Toyota “have been determined and undertaken in good faith but have met uniformly without success,” admits LaSorda.

Chrysler approached Toyota last June, suggesting that “Toyota use Chrysler’s excess capacity to build new products or work to develop advanced technology vehicles, such as hybrids.” A month later, Toyota wrote back saying thanks but no thanks. It only took Honda a single day last December to politely decline Chrysler’s offer. Nissan took a little more time to decide against a Chrysler tie-up. Rumors of a Chrysler-Nissan alliance were thick in 2008, as executives met half a dozen times, even exchanging term sheets. “In May, the teams reported that an alliance between Chrysler and Nissan could generate operational synergies on a gross cash basis of more than $11.8 billion in cash flow for Chrysler only ($18 billion for both companies),” says LaSorda. And still no deal emerged, reportedly because Nissan couldn’t commit enough financing resources. Even after those talks fell apart, Chrysler went back to Nissan looking for another deal as its position crumbled further late last year. No deal.

But really, “the hedge funds” are to blame for Chrysler’s bankruptcy. Just ask the Michigan House of Representatives.

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16 Comments on “LaSorda: Chrysler Tried to Hook-Up With Toyota. And Everyone Else....”


  • avatar
    AKM

    Does that sound just a little desperate? I guess it fit with Cerberus’ vision for Chrysler, of dismantling the company and selling its assets.

  • avatar
    brettc

    I’m surprised that VW didn’t want a part of it. They supplied Omni/Horizon engines years ago and now Chrysler is was building Routans for them. I sure hope VW has enough Routans stockpiled to keep up with demand.

  • avatar
    menno

    Re Routans: What demand?

  • avatar
    RickCanadian

    I wonder what would have been the spin of the UAW and D3 cheerleaders had Toyota agreed to take over Chrysler…

  • avatar
    NBK-Boston

    “These hedge funds have made lucrative profits and now have turned their backs on Michigan workers. They balked at the chance to put greed aside and act for the good of everyone.” — Mich. State Rep. Deb Kennedy, D-Brownstown.

    Said “lucrative profits,” presumably, the state of Michigan shared in as an investor, if the state was an investor. And if not (which is what it seems), this is meaningless grandstanding, since nothing is actually being done to affect these investment funds.

    Michigan is free to invest its money (state employee pension funds and the like) as it chooses. This decision may be a good one, a bad one or a meaningless one financially. Let the people of that state live with it.

    The one way this could blow back on the rest of us is if the Michigan fund, poorly invested, goes bust, and then the state asks for a federal bailout. In such a case, a bailout should be denied, or given only if, going forward, the Feds claw the cash back by collecting extra contributions from the state. A perhaps better solution would be to set up (or include) state pensions into the existing (or a new, state-employee-only) national pension insurance / guarantee scheme. The cost for entering the scheme would be yearly insurance premiums from the states, and those premiums could be risk rated — states that have bad management practices (such as making investment decisions based on political grandstanding) would have to pay more to participate. That entity could have the explicit backing (or explicit non-backing) of the U.S. government, so employees accumulating pension benefits would know exactly what they are getting, and where to turn to for it.

  • avatar
    threeer

    @brett…assuming that was said tongue firmly in cheek…

    I’d assume that folks would have tried to cherry (chery?) pick certain nuggets from the Chrysler line-up and leave the rest to rot. Figure that maybe the rights to (certain) Jeeps, or at least the name and perhaps the Ram would have held some interest, but the rest? C’mon…who in their right mind wants to assume the Sebring? Or the Caliber? Or the Nitro? or…well, just about anything else they produce.

  • avatar
    windswords

    The company was off in a bad way, despite changes they were making and being hamstrung by not having a real car company (like Magna) own them instead of a hedge fund. They tried to sell certain assets and put together alliances that would help them. One alliance succeeded (VW), one almost (Nissan), the rest were stillborn. End of story.

    I wonder if one reason Toyota said no to a leased factory (which would have saved them big bucks not having to complete the Mississippi plant) was that workers in Chrysler plants were union. Even if they didn’t have to hire former plant workers I don’t think they wanted to go near a situation like that. What do you think?

  • avatar
    jolo

    RickCanadian asks an intriging question:

    I wonder what would have been the spin of the UAW and D3 cheerleaders had Toyota agreed to take over Chrysler…

    According to article I read at:

    http://finance.yahoo.com/news/Chryslers-speedy-bankruptcy-apf-15103068.html?.v=15

    and I quote, “At a hearing Friday in Manhattan bankruptcy court, Chrysler attorney Corinne Ball said the company will also file its motion to sell substantially all of its assets to Italian automaker Fiat Group SpA before Saturday morning.”

    So, not a Japanese company, but another European one. Will they still be Chrysler or will they be Fiat’s Chrysler division? Or will they be known as Chrysler, Fiat’s Bitch?

  • avatar
    Edward Niedermeyer

    No Routans have been built since December, per Automotive News [sub]. “VW has sold only 5,582 Routans; the factory has produced 22,037”

  • avatar
    Srynerson

    I was going to express surprise at the inclusion of GAZ on that list, but I see from Wikipedia that GAZ actually bought the equipment and rights associated with the Dodge Stratus from Daimler back in 2006, so it’s not a total non-sequitur for Chrysler to have approached them.

  • avatar
    Verbal

    Tom LaSorda really should have stuck to managing the Dodgers.

  • avatar
    John Horner

    All of which puts the lie to the assertion that the various creditors would have gotten a good return from liquidation proceedings.

  • avatar
    psarhjinian

    This was Cerberus’ plan for Chrysler: outsource costly functions, contract out where profitable, act as a kind of services clearinghouse. Very GE.

    It didn’t work because:
    a) Companies that could afford it already had decent products and didn’t need the help**
    b) Even if they did, shacking up with Chrysler is not the way to go.***
    c) The economy kiboshed the idea.

    ** except Volkswagen.
    *** unless you’re Volkswagen, again. This should tell you something about Volkswagen

  • avatar
    wsn

    It only took Honda a single day last December to politely decline Chrysler’s offer.

    In a typical office environment, it takes threes days to confirm a meeting…

    Honda sure knows what it’s doing.

  • avatar
    wsn

    psarhjinian :
    May 1st, 2009 at 1:42 pm

    It didn’t work because:
    a) Companies that could afford it already had decent products and didn’t need the help**

    I want to add that it also depends on whether the companies line up is bloated or not.

    Toyota has a large number of models, so they considered for longer. Honda is very careful not to add unnecessary models and declined in one day.

    Chrysler might have better luck with Daimler, since Daimler has 3432 AMG models in its lineup. Wait, oh, Daimler was Chrysler’s ex. Well …

  • avatar
    brettc

    Yes, the Routan comment was dripping with sarcasm, too bad it’s hard to tell on the interwebs.

    Thanks for the numbers on the Routan, Edward N. I’ve gotta subscribe to Automotive News I guess. The total production number vs total sales doesn’t quite match up! I wouldn’t be surprised to see them discontinue it and have some good deals on the remaining inventory soon. Not that I’d ever buy one though. I’d buy a Sprinter first.

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