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Category: Articles » Automotive » Cars » Article » Article Code

Chrysler's Weakness Attracts More Suitors

DaimlerChrysler AG's announcement Wednesday is expected to create a whirl of speculation about who would be interested in the Auburn Hills-based Chrysler. With a large amount of capital available on various markets today, possible suitors could include private equity groups and other automakers. The former could invest heavily in the auto supply sector while the latter could venture on aiming a bigger presence in North America. The anxious workers were rattled by what DaimlerChrysler CEO Dieter Zetsche said. "In order to optimize and accelerate the presented plan we are looking into further strategic options with partners beyond the business ... read more

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The anxious workers were rattled by what DaimlerChrysler CEO Dieter Zetsche said. "In order to optimize and accelerate the presented plan we are looking into further strategic options with partners beyond the business cooperation partners mentioned," Zetsche said. "In this regard, we do not exclude any option. ..."

Renault-Nissan, the Franco-Japanese alliance that pursued an alliance with General Motors Corp. last year, could be one of Chrysler's suitors.

"There are two things working in Chrysler's favor here," said John Casasa, managing partner at New York-based Casesa Strategic Advisors. "There is a great deal of capital out there, and there still are companies that want to establish a presence in North America. Renault-Nissan is the first that comes to mind. One of these Chinese companies could look at Chrysler to get a huge distribution network and established brands, but that might not be realistic at this point."

Another potential suitor is General Motors Corp. A German newspaper earlier reported that DaimlerChrysler is already in talks with GM about a probable deal. When asked about the report, Dieter Zetsche, DaimlerChrysler AG CEO, declined to comment. "Realistically, there are a limited number of potential buyers," said Jack Nerad, executive editorial director and executive market analyst of Kelley Blue Book's kbb.com.

Nerad added, "It is doubtful that another European-based company would want to acquire the company, and the Japanese companies that are large enough to consider such an acquisition seem to be doing quite well in North America on their own."

However, analysts in the industry are saying that Chrysler's truck-heavy lineup could scare off some potential buyers.

"The same factors that made Chrysler a darling of the public and press as recently as two years ago -- trucks, SUVs and rear-drive sedans -- are the same factors that have hurt its fortunes recently," Nerad said. "Dealing with market swings, like the recent shift to vehicles that offer greater fuel economy, are an important factor in continuing success in the automobile business. Since many Chrysler executives were schooled at Mercedes-Benz, which is less vulnerable to such shifts than a mass-market manufacturer is, it is possible they did not anticipate the critical nature of dealing with change. Now they are dealing with it, but rather painfully."

DaimlerChrysler AG is headquartered in Stuttgart, Baden-Württemberg, Germany, Auburn Hills, Michigan, USA and Japan. It is prominent in the field of truck and car manufacture. However, its prominence in those fields is now being challenged by the industry's growing crisis.

DaimlerChrysler, formed in 1998 by the merger of Daimler-Benz and the Chrysler Corporation produces vehicles under Chrysler, Dodge, Jeep, Mercedes-Benz, Smart, and Maybach brands. The Chrysler Group composed of Chrysler, Jeep and Dodge also provides auto parts and accessories such as EBC brake pads, rotors, disc brakes, step pad and more. They are marketed under the Mopar brand name.

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