Daimler pays to dump Chrysler

CNN ^ | Monday, May 14, 2007 | Chris Isidore

[MinorityRepublican]

NEW YORK (CNNMoney.com) -- DaimlerChrysler moved to undo the most expensive and one of the least successful mergers in auto industry history Monday as it agreed to essentially pay to dump the money-losing Chrysler unit which it paid $37 billion for nine years ago.

DaimlerChrysler (Charts) announced it will sell an 80 percent stake in its U.S. brand to Cerberus Capital Management, a private equity investment firm that will pay $7.4 billion.

But the German automaker, which will be renamed simply Daimler, will not actually get most of the money that Cerberus is paying for the once proud automaker. Instead Cerberus will contribute $5 billion to the Chrysler auto operations it will now control, with just over another $1 billion going to Chrysler's finance arm.

While Daimler will receive the remaining $1.4 billion of Cerberus' capital contribution to the sale, Daimler expects to have to cover another $1.6 billion in Chrysler losses before the deal closes. So Daimler estimates that it will end up paying out about $650 million to close the deal, and that its earnings for 2007 will take a $4 billion to $5.4 billion profit hit due to charges related to the transaction.

[Red Badger]

For Sale By Owner:
1 Slightly Used Automobile Company
Hardly Driven, Low Incentives, Low Quality, Workers overpaid,
Will not last...........

[bullfeather]

But; but ; they said they bought it because they wanted to know how Chrysler made a profit on cars.

[krb]

Coyote ugly.

[2banana]

DaimlerChrysler moved to undo the most expensive and one of the least successful mergers in auto industry history Monday as it agreed to essentially pay to dump the money-losing Chrysler unit which it paid $37 billion for nine years ago.

DaimlerChrysler (Charts) announced it will sell an 80 percent stake in its U.S. brand to Cerberus Capital Management, a private equity investment firm that will pay $7.4 billion.

Never has much been lost by so few in so short a time...

[2banana]

DaimlerChrysler moved to undo the most expensive and one of the least successful mergers in auto industry history Monday as it agreed to essentially pay to dump the money-losing Chrysler unit which it paid $37 billion for nine years ago.

DaimlerChrysler (Charts) announced it will sell an 80 percent stake in its U.S. brand to Cerberus Capital Management, a private equity investment firm that will pay $7.4 billion.

Never has so much been lost by so few in so short a time...

[gridlock]

The sad thing is that if Chrysler made a good car, the World would beat a path to their door.

[SQUID]

Well, they found out didn’t they?

[Red Badger]

They got the looks part okay, they just gotta work on that stuff inside, .......

[listenhillary]

LOL! They did.

[mnehring]

7.4 Billion.. I have a sneaking suspicion this is probably the value of raw assets only such as land and equipment.. I wonder if we will even see Chrysler in existence in a few years or will all the plants and land be sold off as scrap?

[HamiltonJay]

Chrysler isn’t hurting, JEEP brand is riding high, 300’s are selling well, and the PT Cruiser still sells... Sebring convertible is still the choice of folks who want a convertable and need a real back seat. Dodge is doing well with its trucks and some of its retro muscle car stuff.

Problem with Chrysler is the same its always been QUALITY CONTROL.... Engineered some great stuff over the years only to have those great designs be executed poorly.

Merging with Damler was stupid, and made no sense from the get go IMHO. CEO got his giant parachute and walked away, he didn’t care about the long term of the company... as very few ever do these days.

It will be interesting to see what exactly happens with Chrysler going forward.

[listenhillary]

Look for Daimler to open the new Socialist School of Business and technology and show us all how it is done.

[K-oneTexas]

It's interesting who is buying an 80% stake in the company (Cerberus Capital Management). It's also interesting as well who is a member of this group (John Snow). Hopefully this will translate into better decision making. But that remains to be seen since the Germans (Daimler-Chrysler) still maintains 20% ownership.

I really, really don't think Deiter inspired or anything else American customers with his commercials either. But alas we have lost many good American cars over the last few years and not to foreign owners.

[keepitreal]

Daimler’s Mercedes unit has had terrible quality control problems in the last few years itself.

http://www.consumeraffairs.com/news04/2006/01/mercedes_ads.html

[The South Texan]

I tend to agree with your take. Chrysler does indeed have some good looking products out there, but the quality control does stink. A fellow employee of mine bought a Jeep Commander and it looks and feels nice except he kept on having to take it back to dealer because he could here wind noise thourgh the seal on the front windshield. Took 3 trips to dealer to finally get it resolved.

[Moose4]

I guess Daimler didn’t get a Carfax auto report before they bought.

}:-)4

[KenHorse]

Maybe this explains why when I was recently shopping for a used Corvette (which I bought!), I noticed used Mercedes were going for what I considered dirt cheap!

I was somewhat surprised to see them depreciating so badly! I mean 2002 S series selling for under $16K?

[South40]

My Chrysler Sucks

[sittnick]

The sad thing is that if Chrysler made a good car, the World would beat a path to their door.

Chrysler has made plenty of good cars. Ever hear of the Viper, the Dodge Caravan, Jeeps?

When Daimler-Benz bought Chrysler they took a decent company with some good stuff just out (the Dodge Intrepid, Neon, and the most successful Dodge truck line ever) with some fun stuff on the drawing board (new 300, Plymouth PT Cruiser) and immediately went to work messing up the company. They ditched Plymouth and bastardized the formerly semi-upscale Chrysler badge by selling Chrysler Neons.

Sure, lots of crap came from Chrysler during the '70s and '80s, but Daimler bought a healthy company and ruined it, just as AT&T did with their NCR buy out, and Unisys did with the Sperry/Burroughs merger.

There are plenty of good cars that didn't sell well, (Corvair, AMC Javelin, Oldsmobile Aurora), and plenty of crummy cars that sold fairly well (Pontiac Fiero, any GM with a Quad-4 engine, Ford Windstar, Toyota Previa minivan (1st version))

Marketing and perceived value and proper pricing (the Aurora and new T-bird were too dang expensive) are part of the equation, too.