Two Private Equity Firms Interested On Chrysler

February 14 was a sad day for Chrysler employees in the country. On that day, DaimlerChrysler Chief Executive Officer Dieter Zetsche announced that due to the poor performance of the U.S. brand, all options are open for the brand including its sale. The day also saw the workforce reduction carried out by the company as a part of its restructuring plan.

The speculations that Chrysler will be for sale is made even more plausible with the emergence of interested firms popping out and saying that they are interested in buying the U.S. arm of DaimlerChrysler AG. It can be remembered that Chrysler has already planed to cut down the number of their employees in the following months.

Aside from workforce reduction, the restructuring plan of Chrysler involves closing down of a plant and eliminating shifts on two plants. These steps, as Chrysler maintained, are necessary to address the reduced demand for their vehicles.

Recently, The Associated Press reported that there are now two firms which are most likely going to be the next owner of Chrysler. The Cerberus Capital Management LLC and a group of investors led by the Blackstone Group and Centerbridge Partners LP. These firms have expressed their intention to buy the troubled company. The American news agency reported that representatives of the group have made a visit at Chrysler’s headquarters in Auburn Hills, Michigan.

The Associated Press also spoke with a Chrysler insider who disclosed that potential bidders are now looking into Chrysler’s financial status.

Another firm that has shown interest in Chrysler is Canadian car parts manufacturer Magna International along with the largest car manufacture in the world, General Motors. Although the Canadian firm has shown interest, insiders said that the possibility of the Canadian firm buying the company has been reduced. There are also other firms that have shown interest on Chrysler although these are not as strong as the interest shown by Cerberus and Blackstone are Apollo Management LP, and the Carlyle Group. These firms have not yet made comments about their interest on the car maker.

As far as the rumored takeover of General Motors of the ailing Chrysler group, experts pointed out that it looks unlikely. While General Motors has yet to comment about the rumored interest they might have on the third U.S. car maker, speculations in the auto industry says that the world’s largest car manufacturer will not gain any advantage from the acquisition of the ailing group. On the other hand, another U.S. brand, Ford, when asked whether there is a possibility of them buying Chrysler, Ford CEO Alan Mulally flatly said that it will never happen.

On a sudden twist, DaimlerChrysler AG Chief Executive Officer Dieter Zetsche has announced that there is a possibility that Chrysler will still remain as a part of the German company. But the emergence of the two firms most interested in the purchase of Chrysler has a look similar to Nissan cornering lights which shows which way Chrysler is going in the future.

By Ryan Thomas.

DaimlerChrysler Selling Chrysler AG at a Bargain Price

Investors that are planning to purchase Chrysler are advised to become a marketing savvy and to prepare $7 billion as payment. It is true that the Chrysler deal looks better on paper due to the bargain that the buyer is getting.

The price tag of the Chrysler Group range from $5 billion to $7 billion which is rather far from the $36 billion valuation of the original merger---and just like what most analysts observed with the present price that DCX is selling Chrysler it is more of trying to pay its buyer so that it can once and for all get rid of its loss-making American arm without considering making a profit.

The new owner would also have to market its way out of one of the great automaker inventory gluts of all time comprising of surplus of steel that pushed Chrysler to the brink last year. Plus there are also other issues that new buyer would have to deal with like branding and positioning issues.

Chrysler---American arm of Daimler and manufacturer of top-of-the-line Jeep rims--- has not been able to clearly define and differentiate its brand trio something that experts question at last week’s New York Auto Show. They said that Chrysler has failed to do this. Vic Doolan, non-executive chairman of consultant Courland Automotive Practice said that the carmaker was overlapping Dodge, Chrysler, and Jeep models that instead of them competing with other brands ended up competing with each other instead. Doolan also recommends for the automaker to build its global presence to reach fats-growing emerging markets such as China.

John Morel, director-product and market planning at American Suzuki Motors Corp. has also given Chrysler some advice. He said that before spending a great deal on marketing Chrysler needs to differentiate its brands since the company has too many similar products such as Dodge Durango and Chrysler Aspen.

Mr. Morel has observed that Chrysler has stretched its Jeep brand too far saying that the Commander is already hurting the sales of the Grand Cherokee while the Jeep Compass is competing with the Dodge Caliber which is not good.

Auto consultant Gordon Wangers has also given his own observation saying that Jeep’s crown jewel, the Grand Cherokee is being ignored by Chrysler. He also pointed out that the Dodge Ram needs also to be redone so it can effectively compete again as a key player in the full-size-pickup segment. The last time that the model has gotten a makeover was in the year 2001. And at present it is considered to be the oldest in Detroit.

Last week at DaimlerChrysler’s annual meeting, Chairman Dieter Zetsche has confirmed the company’s worst-kept secret: the automaker is in discussion with undisclosed parties to sell Chrysler.

From the time that Chairman Zetsche has announced that Chrysler is for sale reports on its possible buyers have been flooding the net and just recently the number of contenders have lowered down to two New York financial outfits namely the Blackstone Group and the private-equity firm Cerberus Capital Management, and the Canadian auto supplier Magna International Corporation. And just last week Kirk Kerkorian has also offered a $4.5 billion bid for Chrysler.

By Lisa Ziegler.