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Is Cerberus Prepping Chrysler for Sale?
Filed under: Opinion, Chrysler
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It seems that auto industry pundits are pulling their hair out over what appears to be happening over at Chrysler.
First, it has turned to other auto makers to help them fill holes in its product line. It is, for example, getting cars from Chery, a Chinese company. It has formed a joint venture with Nissan in which the Japanese auto maker will build mid size and small size cars for it.
Pundits are going bananas that Chrysler has stopped leasing cars, giving its dealerships only one week’s notice. And, to pour more bad over bad, the pundits watch as sales of Chrysler vehicles plummet. Sales of Chrysler vehicles dropped a disturbing 29 percent in July and a troubling 22 percent in the first six months of this year over the same period last year.
The result of all this hair-pulling? Pundits are now concluding that Chrysler doesn’t have the money or the talent to construct cars themselves. The automaker will, instead, manufacture only large sedans as the rest of its inventory is supplied by Nissan, Chery, and perhaps others.
Chrysler of course, confronted the doomsayers by pointing out that it was profitable during the first half of this year with a $1.1 billion operation budget.
Pundits don’t believe it. Worse, they say that if Chrysler continues on this road, then more problems will result. They argue why would anyone buy a Nissan-built car from a Chrysler dealer when they can get it from the source -- a Nissan dealer. In order to sell the Nissan knock-offs, Chrysler dealers will have to take less of a profit so they can compete.
So what does all of this mean? Pundits say that Cerberus, the private equity firm that owns Chrysler, is "prettying up the pig", so to speak, so it can sell it.
Our take is that what Cerberus is doing with Chrysler could indeed be a stop gap for now. What a way to keep it afloat! But instead of selling, why not believe that it will lead to a “new” Chrysler with its own new smaller fuel efficient cars and lighter trucks. This period could be a way to stay alive as they hunker down for a short time, make a plan that it can execute, then come out roaring.
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