Discussion Starter · #1 ·
The full article is available here: http://www.autoobserver.com/2008/02/chrysler-wont-s.html#more.Chrysler LLC won't survive on its own and its private-equity owners should sell the company to a foreign automaker, Dow Jones reports a former finance chief of the automaker.
"Step A is that Cerberus Capital Management should do everything they can to fix it, and step B is that they should sell it to a foreign automaker that has strong market share in emerging markets," said Jerry York, who was Chrysler's chief financial officer between 1990 and 1993. He now serves as a representative of billionaire investor Kirk Kerkorian.
Chrysler executives also told dealers at their recent convention it could cut its number of models by as much as half and reduce the number of dealerships selling its cars by as much as a third in an effort to boost efficiency.
York said he still wasn't convinced.
"Most of Chrysler's volume is in the U.S., which is a mature market that is using dog-eat-dog incentives (to sell cars)," York said. "Their styling is way off, and they are not connecting with the customer."
I suspect that as a private equity firm, Cerberus will sell off Chrysler once they believe they can make money on the sale, and I suspect that will be sooner rather than later, but I doubt Cerberus would bail out now. They bought Chrysler believing that they could easily (and relatively cheaply) fix it up and sell at a profit. Private equity firms are all about return on investment and getting a return for shareholders as soon as possible, not losing shareholders' money.