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.

[gogeo]

Corinthian leather!

[sittnick]

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

A limited production sports car, bread box styled minivan with transmissions that self destructed and a QC plagued series of SUV's? If those are their good cars they deserve to be out of business.

A limited production sports car -- how does being limited production make it less than good? Almost all sports cars of that type and power would be "limited production".

"bread box styled minivan" -- all minivans are more or less bread box. I'm sorry that you don't like minivans. However, the Chryslers defined the category, were routinely at the top of the ratings (the Japanese competition was basically converted Japanese delivery vans. The original Previa was dreadful.), and were a good value for the money. Individual models had the tranny problems (and engine problems, and front end problems). At the time the krauts bought Chrysler, any other manufacturer would have loved to have had Chrysler's share of the minivan market.

The Jeeps were not that QC plagued at the time of the German purchase.

These were all popular vehicles. I'm sorry that you don't like the Viper because it's too exclusive, the Caravan because it isn't exclusive enough, and the Jeeps because they weren't all perfect (and yet every other manufacturer was trying to compete against it with their own SUVs).

Also, be aware that Chrysler had just come out of making the awful Volare/Cordoba/Aspens, the uninspiring Horizon/Omni (which still compared favorably to the Chevette, but not the small Jap cars), and consistent third out of third place pick up trucks. Bob Lutz had them headed in the right direction.

You don't have to like Chrysler, but they were a healthy company with products that people wanted when the Krauts bought them. Other companies mimicked Chrysler's moves in style and functionality (The Pontiac Bonnevilles definitely borrowed from the Intrepid, the PT Cruiser inspired knockoffs, and everybody has made those bread box styled minivans. Only Chrysler did it first [if you don't count the old VW microbus]). It is disingenuous to say they didn't have cars and trucks that people wanted, even if you don't like them. As for me, I still wish I could get a '67 Dodge Dart with a slant six in new condition, or maybe a '64 Imperial with the 413.

[sittnick]

I can sympathize with your pain with the Caravan. When our ‘91 Ford Aerostar gets retired (GREAT minivan, 210,000 mi.) we will have to replace it with another, and I am afraid that Chrysler weirded up the car too much for my taste. We may wind up with a Chevy Uplander.

[Arthalion]

Oh buddy, don’t get me started on the Caravan. I bought my wife a new one in 2005, and I only own it today because the Caravan’s resale value is even poorer than its build quality. In two years of owning the car, it’s been in the repair shop NINETEEN TIMES. Transmission problems, sensor problems, vacuum system problems, electrical problems. You name it, it’s broken. The suspension started wearing and required bushing replacements at 30,000 miles, the doors randomly unlock themselves as you’re driving down the road, and there are deep gouges in the side glass where the low quality guides failed and the glass began rubbing the metal inside the door. And I’m not even going to get into the pops, groans, and squakes that plague the stupid thing.

The low quality and poor resale value has turned me off to ever buying one of their cars again. Just last year I was looking at replacing my own car with a small SUV, and I seriously considered buying a Jeep. I eventually thought better of it and bought a Nissan Xterra. I’ve never had a problem with it.

The Caravan will be paid off next year, and my wife is looking at replacing it with either a Honda or a Nissan mini van. American car companies don’t seem to remember what “quality” is anymore, and we’re tired of spending $25-$30k on garbage cars every few years.

[Past Your Eyes]

Since when did I say or even imply that Corvair was made by Chrysler?

[Past Your Eyes]

I drove 2 different Corvairs back in the ‘60s. My heart was in my throat the whole time. That may be the only thing that Ralph Nader ever got right.

[ColdWater]

The Corvair was a good car???? Good grief, Charlie Brown. That POS wouldn't even stay in the road at over 40 MPH.

Perhaps it was the driver ...

[KenHorse]

When did Daimler buy Chrysler?

I have a '94 Dodge Dakota (V8) 4x4 with an auto tranny with over 100K on it. And all those miles have been without a hitch.

[KenHorse]

The Corvair was a good car???? Good grief, Charlie Brown. That POS wouldn't even stay in the road at over 40 MPH.

Ahhhh the Corvair. The car that made Ralph Nader a household name....

(remember "Unsafe At Any Speed"?)

[mdmathis6]

The “Corinthian leather”

Then you have the 2 letters to the Corinthians, who may have worn leather sandals in those days....

[Orange1998]

I was all a hoax??? I thought Corinthian was some animal from Africa. LOL.

[Milhous]

What Daimler gains from the deal is closing the door on ongoing losses and liability for future health care costs, for Chrysler's unionized employees and retirees, estimated to be as high as $18 billion.

Unbridled socialism ruins yet another great business by mutating it into a health maintenance organization. America needs to find a path back to Nash Motor's ideal of "Giving the customer more than he has paid for".

Love it or hate it, Chrysler's PT Cruiser seems like a hit IMHO.

[Clemenza]

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

Agreed. Maybe Cerebus can channell the spirit of C. Edward Deming, the father of TQM.

[Clemenza]

CoREEEEENNNNTHIAN leather!

[Clemenza]

Lee Iacocca, you mean the flim flam man who scammed a loan out of THE AMERICAN TAXPAYER?

[Clemenza]

Well, Buchananites “pertecktionis” are on the left side of the bell curve, so don’t plan on changing their weak little minds...

[Dinsdale]

remember "Unsafe At Any Speed"?

Remember Naders own people copping years later that the Corvair's swing axles were no different from anybody else's swing axles (Porsche, VW etc)?

Nobody else noticed (except Corvair owners).

Anybody who couldn't keep a Corvair on the road at 40 couldn't/can't drive.

[gcruse]

NO, the Lee Iacocca who got the govt to vouch for Chrysler’s bonds, then paid the bonds off ahead of time, costing taxpayers nothing. I can’t imagine who you are talking about.

[Clemenza]

Still, Carter should have told the Lido of Allentown to “drop dead.”

[gcruse]

Why? It worked and saved a ton of jobs.