This is from the Allpar site:
Chrysler has more for GM than minivans and Jeeps
October 16th, 2008 by DaveAdmin
Numerous posts, letters to car magazines, and columns have been describing how GM, after acquiring Chrysler, would shut down pretty much everything but the minivans and Jeeps.
Rubbish, I say. Even if Rick Wagoner is as foolish as he looks.
These people don’t know Chrysler. They are still thinking the Daimler line about Chrysler: that it’s nothing but a bunch of aging dinosaurs selling obsolete vehicles nobody wants.
Rick Wagoner has worked in the industry for a long time, and has Bob Lutz sitting in the office down the hall. They know that Chrysler has a lot to offer besides the tired pair of “minivans and Jeep.” Here are a few examples:
- <LI itxtvisited="1">State of the art Phoenix V6 engines <LI itxtvisited="1">Dual-clutch technology. Despite what the media like to say, it’s not all Getrag or Volkswagen patents. <LI itxtvisited="1">Electric cars apparently at a high level of development. <LI itxtvisited="1">Some of the best engineers in the business, though many have quit or retired due to Daimler and Cerberus foolishness. <LI itxtvisited="1">Advanced testing and engineering facilities. If you think GM would shut down the CTC…! More likely they’d abandon GM’s current HQ. <LI itxtvisited="1">Flexible manufacturing. Again, if GM acquired Chrysler, Sterling Height and Belvedere would probably remain intact. Newark’s closing anyway and St. Louis is probably down for the count regardless. <LI itxtvisited="1">Best pickups by a good margin, both light duty and commercial grade chassis cabs. <LI itxtvisited="1">Hemi. Still the best in its class by a good margin.
- Tom LaSorda, though he’d probably be demoted or fired; he’s still a great production guy.
What I don’t think GM would continue is the World Engine (far inferior to Ecotec), the Sebring/Avenger, the Journey, the PT Cruiser, and the Compass. The Patriot would probably be kept and paired with a similar vehicle on some other brand. I doubt the LX would last too long; the G8 and its kinfolk seem to have an advantage beyond being on the home field. Probably the Challenger and Charger would simply move to that body and the 300 would go away. Challenger is too good to drop; Charger has a fairly hefty market. On the other hand, the Chrysler brand would probably go away fairly quickly (I personally would find it hard to defend). Pontiac or Buick would also probably disappear along with GMC (why on Earth is GMC still around?)
At GM, there would also be some carnage. Again, current facilities would probably be abandoned in favor of the CTC and Chrysler’s flexible factories. The Silverado might fade away, too. The Dakota replacement might be favored over the Chevy small pickups. The Phoenix would probably triumph over GM’s various V6 families. The Volt would benefit from sharing with Chrysler.
I’m sure there’s more that the snarky, fashionable, Chrysler-hating columnists have missed.
Personally, I think Chrysler’s future is probably going to rest with a partnership or sale to an international concern. There are many interested in Chrysler, who know more than the various hack writers who are paid to have opinions and readers, but not to provide real information. Nissan/Renault is probably faced with a choice of GM and Chrysler at this point; Chrysler has fewer assets but also fewer liabilities, and much less duplication, especially in Europe where Opel is big, and would be truly complementary in a way Ford and GM are not. Likewise, Tata, if it had the cash, which it probably doesn’t, would find Chrysler a good entry into numerous markets. Any number of Chinese companies would be able to quickly become world players; Americans proved during the early part Daimler occupation that they don’t care who owns the company they buy cars from. (Though every time the “German engineering” commercials came on, sales dropped, so I could be wrong about that.)
The thing is, nobody needs to merge with another company to reap the benefits of a partnership. Executives tend to go to mergers first, probably because they’re easy than leadership or good management; it’s certainly not because they love the success rate (around 20%) of mergers and acquisitions. It helps that their friends in investment banking are always optimistic. Privately, from what I’ve seen, some of the better investment bankers have second thoughts, but most stay in the business and keep bankrupting those companies. They get their $10-$20 million regardless.
This is a lousy time for knee-jerk reactions. If the decision was left to me, I’d eliminate Campi first, because this is the wrong time for trigger-happy lawsuits and vicious streaks in general. Then, I’d do what Chrysler has apparently been doing already: look for partnerships. Need a mid-sized platform and a small car? Fiat and Renault make them, and with some modifications and manufacturing in the unused Belvedere and Sterling Heights capacity, they’d probably be good performers, especially with those new V6 engines … and the four-cylinders with direct injection you can be sure are being tinkered with somewhere in the CTC. You don’t need to exchange shares of the company to make arrangements like that. Likewise, patent sharing with GM would help both companies to make electric cars. Chrysler doesn’t need to be owned by (or to own) GM to use Ecotec engines; GM would probably license their manufacture in Dundee, or supply them for a reaosnable price. The list goes on.
These are frightening times. It’s easy to make a case that Cerberus is indeed desperate to dump Chrysler any way it can - and that’s why they tried to buy out Daimler’s 19.9%. Owning GMAC may indeed be more lucrative, especially with Cerberus’ political connections. Now that the story is out, Chrysler is as much in play as it was back when DaimlerChrysler let it leak that they were talking; the leak made the sale almost certain. Nobody could turn back. Likewise, in this case, it could be that Cerberus’ own investors, though they have insanely deep pockets, will demand that Steve Feinberg sell or swap Chrysler.
Then again, it might just be that Chrysler is seeking to buy GM rather than the other way around, or that they are exploring options without any particular intent, or just trying to get competitive intelligence by pretending to be interested in a deal, or any number of other things. We won’t know until it’s over.
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