Archive for Chrysler

Chery S12 to enter South American market

After a short pause because of the recent change in ownership over at Chrysler, the talks between Chery and Chrysler on their small car collaboration has resumed.

Two cars are being discussed – one is a Chery model that will be badged as a Chrysler in the US market. CKD kits of the Chery S12 will be shipped to Mexico and South America, and the kit will be assembled there for sale in those markets. The Southern American states share similar fate to South East Asia, we always get the boring stuff.

For other markets where something more premium is needed, Chrysler and Chery intends to produce a production version of the Dodge Hornet concept car in China, both engineered and manufactured at Chery’s research center and plant in Wuhu, Anhui.

Production could begin in 2010.

Source

Chery wants to re-examine it’s deal with Chrysler to develop Chrysler-branded small cars for numerous markets, said Zhang Li, Chery Automobile Co Ltd’s general manager. The project has been halted for the moment and awaits renegotiation of the agreement.

This is because Chrysler has recently changed hands, now belonging to private equity firm Cerberus Capital Management LP thanks to last week’s US$7.45 billion deal. Chrysler spokesperson Mary Gauthier said Chrysler’s global growth plans remains the same, and the new owners Cerberus has not changed any of those goals.

I suppose Chery just wants to play it safe and make sure Cerberus is fully aware of all details of the plan.

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DaimlerChrysler has finally dumped Chrysler to private equity group Cerberus Capital Management for US$7.45 billion, or 5.5 billion euros. DaimlerChrysler will still retain 19.9 pecent of Chrysler, which means perhaps a name change will not happen anytime soon. The Cerberus stake is the entire 80.1 percent that’s being dumped off.

DaimlerChrysler CEO Dieter Zetsche said DCX has no plans to sell it’s remaining 19.9 percent of Chrysler, adding that it wanted to maintain close ties with Chrysler.

DaimlerChrysler CEO Dieter Zetsche was “grilled” at a shareholder’s meeting yesterday, for not moving fast enough to dispose of Chrysler, seen as a patient leeching off the profitable German half of the DaimlerChrysler supposed “merger of equals.”

Lawyer Hans-Richard Schmitz represented the shareholders and issued this statement on behalf of the shareholders: “Chrysler is the worst problem in the group. It has been a patient for so many years and a burden for some time. I dont understand why you are so hesitant. The only thing to do is execute a separation. You are underestimating how poisonous this pill can be for your company.”

Besides Schmitz, more shareholders came forward personally to criticize Zetsche during the meeting. “For nine years you have been sitting on this scrap heap called Chrysler. What have you been doing for nine years? Nobody has learned anything. To call this a sale is a euphemism. If you pay for the garbage man to empty the dust bin, then does that mean you have sold something to the garbage man?” said Ekkehard Wenger.

Previously Ekkehard Wenger and another shareholder Leonhard Knoll proposed a name change of the company back to DaimlerBenz because the name Chrysler brought a negative image to the company. DCX’s board responded by saying that was not a valid ground to change the name of the corporation.

Other shareholders have blamed the failed partnership on cultural differences. “Germans care about quality and technical expertise. Americans only want money. They dont care about the craftsmanship of the product. This is an arrangement that must end,” said Georg Nuemeier, also a DCX shareholder. “Ten years should have resulted in a better return. The fact is just that the marriage never worked,” said shareholder Klaus Fiereck.

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Shareholders want Chrysler name dropped from DaimlerChrysler

Two DaimlerChrysler Shareholders, Ekkehard Wenger and Leonhard Knoll have submitted a name change proposal to the DaimlerChrysler board of directors, detailing their wishes for the company to drop the name Chrysler regardless of whether Chrysler gets sold off or not. “If a proper separation cannot be effected within one year, this would only serve to underscore the need to remove this affliction on the image from the corporations name,” said Wenger and Knoll.

However DaimlerChrysler’s board opposes the change, saying there is no grounds for the name change proposal. “The DaimlerChrysler name is established all over the world. There are no grounds to change the name of the corporation,” the company said in a statement.

Nevertheless, a vote on the name change will be held at the shareholder’s meeting in April. DaimlerChrysler was previously known as Daimler-Benz until the merger with Chrysler in 1998. From what was supposed to be a merger of equals, Daimler-Benz ended up babysitting Chrysler through the years.

On the matter of who’ll Chrysler end up with, it seems that private equity groups are willing to pay alot more money than General Motors and automotive-related firm Magna International. The highest bid is currently at US$5 billion, while Magna is offering US$4 billion. Chrysler posted a US$1.5 billion loss last month.

However, employees do not want Chrysler to fall into the hands of a non-automotive owner. “We wouldn’t support a solution such as a private equity firm that would cut out choice bits. We prefer if a manufacturing company like another automaker take control of Chrysler in the event of a sale,” said Helmut Lense, one of the 10 employee representatives on DaimlerChrysler’s 20-member supervisory board.

Lense is also against the Chery deal. “Chrysler won’t improve its image by selling what are effectively Chinese cars,” he said. Lense also thinks a sell-off is not really necessary, as a revamp of Chrysler could be done by doing a total revamp of it’s passenger car model line-up. Chrysler has been over-reliant on truck sales, which have taken a downturn the past 2 years. One solution proposed would be for Chrysler to take over the Mercedes Benz A-Class and B-Class, leaving Mercedes to focus on more premium vehicles.

Other than the obvious buyout by another car company – General Motors, two non-automotive companies have been interested in Chrysler – the Blackstone Group and Cerberus. Investment firm Blackstone is currently already in the auto industry, and has US$125 billion in the bank. It currently has 58% ownership in TRW and has a stake in American Axle. Cerberus is currently looking at Delphi, and already own 51% in GMAC.

Blackstone has been given access to confidential Chrysler data to determine whether the firm is worth buying or not, while Cerberus has hired Chrysler’s former COO to advise it on a possible bid. This former COO is none other than Wolfgang Bernhard, who was involved in turning Chrysler around to a short-lived earnings rebound a few years back, but somehow got booted off the team in 2004. He then joined Volkswagen, and left in January 2007.

Other companies said to be interested in possibly taking up stake in Chrysler include Magna International and General Motors.

GM said they were interested. Renault-Nissan said they had too much on their hands. Hyundai declined any interest. SAIC of China said no interest in anymore foreign buyovers. Here comes Magna International, to Chrysler’s rescue.

Magna International has always been on the lookout for Chrysler. On the eve of the Jeep Wrangler’s launch in August 2006, Chrysler found itself suddenly without a paint-shop supplier. Magna’s chairman Frank Stronach sent in a team from Magna Steyr, adding new equipment to the Toledi Supplier Park and helping Chrysler with talks with the UAW so that the Wranglers could roll off the assembly line on time.

This is of course understandable – 26% of Magna sales come from Chrysler. Total sales for 2006 was US$24.18 billion – 26% is about US$6.28 billion. That’s alot of money. Frank Stronach is also the highest paid auto parts manufacturer executive at US$33.3 million a year in 2005.

Hence as a move to protect it’s contracts with Chrysler, as well as help out a major customer, Magna starts to make it’s moves to buy over Chrysler, with Stronach confirming interest to US media today. But how will Magna buy Chrysler, a company with 2.5 times the revenue of Magna? What makes it worse is despite raking in that much revenue, it still posted a loss of US$1.5 billion in 2006.

More updates on the potential break-up of American-German automotive giant DaimlerChrysler. DaimlerChrysler recently announced it might sell off the Chrysler group, viewed by some as going back on it’s word for commitment in making the partnership work. DaimlerChrysler issued a statement to the media today saying it’s future strategy for Chrysler’s could only be decided in weeks or months.

Chrysler CEO Tom LaSorda has decided to shed some light on the matter, whatever light he is able to shed without implicating himself legally of course. The full unedited email is available after the jump.

Click here to read the rest of Chrysler CEO Tom LaSorda’s email to employees

Jeremy Clarkson of Top Gear compares the Chrysler 300C SRT8 to the E60 BMW M5. Not a bad comparison I would say, as the Chrysler 300C was based on a previous version of the Mercedes Benz E-Class, now called the Chrysler LX platform. The SRT-8 version features a 6.1 liter Hemi V8 engine making 425hp at 6,200rpm and 569Nm of torque at 4,800rpm. This is the same engine used in most SRT-8 versions, including Dodge and Jeep vehicles.

It’s interesting how the two companies chose to engineer the top of the line performance versions of their mid-sized luxury sedans. The BMW M5 proves to be a real driver’s car – but what about the 300C SRT-8?

Video after the jump.

Click here to read the rest of E60 BMW M5 vs Chrysler 300C SRT8 Video

Ever since DaimlerChrysler announced that the sale of Chrysler and it’s brands (Dodge, Jeep) to another party is now an option, there has been plenty of rumours, supposed insider news as well as speculation on who the new buyer would be.

Seen as a forefront to the Chrysler purchase is General Motors, who analysts think would purchase Chrysler as a defensive move against import marques like Toyota. Analysts think purchasing Chrysler would give GM a US$9 billion value in terms of product line-up, operating efficiencies including reduced R&D and advertising costs. Stock market analysts are mixed over the issue, with John Murphy of Merrill Lynch rating GM shares as a buy, while Jon Rogers, a New York-based analyst at Citigroup Investment Research rated them as a sell. DaimlerChrysler shares remain unrated.

Some think Hyundai may be a good match for Chrysler, and Hyundai has already worked with Chrysler before on certain projects including the Global Engine Manufacturing Alliance project along with an accompanying platform, as well as rebadging Hyundais as Dodge cars in Mexico. Hyundai needs more plants in the US, something Chrysler has. Hyundai currently only has one plant in the US. Hyundai needs a V8, Chrysler has the Hemi. Chrysler used to own a 10.5% stake in Hyundai. Hyundai is good at small cars, Chrysler is not – Chrysler’s good at big cars, Hyundai isn’t.

Other speculated potential suitors are the Nissan and Renault alliance, as well as SAIC and Chery of China. Chrysler and Chery already have an agreement for Chery to assist Chrysler in building small compact cars, something that Chery does best. Foreign automakers like Toyota, Hyundai and the Chinese makes are cited as one of the reasons GM would buy Chrysler, as having a foreign Korean or Chinese marque gain access to Chrysler’s extensive dealer network would be a problem – the American companies already have problems fending off the Japanese.

Anyway, whether GM takes up Chrysler or not, they are already in some form of joint venture talks now, as General Motors might give Chrysler access to it’s GMT900 platform large-SUV, something that Chrysler does not have an equivalent in it’s line-up.

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