Chrysler Could Be Split Up between GM and Renault-Nissan

Clearly the hottest talk in the auto industry right now revolves around Chrysler LLC. Privately owned by Cerberus Capital

The Dodge Grand Caravan is Chrysler's most valuable asset, and the only product GM is likely interested in. (Photo: Trevor Hofmann, American Auto Press)

Management LP, and suffering major losses so far this year with an overall car and light truck market that doesn't shed a particularly positive light on its fortunes changing anytime in the immediate future, it appears the latter portion of the “make or break it” scenario is all that's left.

And “break it” is what Cerberus may do, splitting up Chrysler in into chunks and selling these off to the highest bidders. GM has been in talks with Cerberus for more than a month, the exact details of which are still not known, while previous and concurrent discussions have been taking place with France's Renault-Nissan.

Such a move, while appearing like a classic corporate raider tactic that Richard Gere's character Edward Lewis in “Pretty Woman” might execute and Vivian Ward (Julia Roberts) would try to talk him out of, might be the best way to maintain Chrysler's brands intact, although it's difficult to see where the namesake brand, Chrysler, would fit into the scheme.

General

No doubt Nissan would like a piece of Dodge's light truck market. (Photo: Dodge)

Motors is reported to be most interested in the Chrysler/Dodge Town & Country/Grand Caravan minivans, but there really isn't anything within the Chrysler/Dodge lineup that GM doesn't already build a competitor to. No doubt the General is interested in Chrysler's $11 billion-plus in reserves, but it's already in the process of shuttering numerous plants of its own, so there's not much benefit in acquiring more North American production capacity, although Chrysler's the Mexican facility that assembles Dodge Ram trucks would be a bonus.

This is where Renault-Nissan comes into play, hoping to return to the world's largest automotive market with the French portion of the union. It will need North American production for its cars and will no doubt take back the Jeep brand that was once in the Renault fold as part of American Motors Corp. (AMC), which it sold off to Chrysler 20 years ago.

Nissan,

Last month Chrysler debuted an electric vehicle program that really shows forward thinking. (Photo: Chrysler)

on the other hand, stands to lose a production partner in small cars, with Auburn Hills no longer needing its rebadged Versa, but could gain full access to the Ram light truck lineup for its next generation Titan. The upcoming Titan replacement is already planned to ride on the Ram platform, so the fit makes a great deal of sense. Currently Nissan only builds a half-ton pickup, and doesn't offer diesel power, but Ram would give Nissan half-, three-quarter- and one-ton platforms, plus numerous cab and chassis configurations for a more competitive Titan, as well as potential access to the Cummins diesel.

Nissan doesn't have its own hybrid drivetrain either, but rather relies on Toyota's Hybrid Synergy Drive system to power its Altima Hybrid, so the access to the dual-mode system Chrysler co-developed with Daimler, GM and BMW could immediately transport it into the alternative powertrain era.

What's for certain is Cerberus desire for the remaining 49-percent of GMAC financial

Jeep would likely go to Renault, although GM has just put Hummer up for bids so they could be creating a void to be filled by the iconic 4x4 brand. Photo: Steven James Day, American Auto Press)

still in GM's hands. Cerberus currently owns 51-percent, and would likely be willing to give up bits and pieces of Chrysler for full ownership.

So how likely is the “merger” to occur? It looks likely, according to industry analyst Dennis DesRosiers who spoke to CTV News yesterday.

“Well, I think there's above average chance,” said DesRosiers. “If you go back a couple years ago when Daimler was shutting Chrysler and Cerberus ended up with it, the hot talk of the time was that General Motors was seriously interested. The timing was very bad. They had their own problems to deal with. They didn't also want to have to deal with Chrysler problems. So we've kind of come full circle, the private equity company don't buy a company like Chrysler to stay in, they buy it to fix it and then sell it, and given the downturn in automotive globally, they obviously see it's time to get out, and General Motors and Renault are two very viable players in this game.”

Obviously

Renault needs North American plant capacity if it plans to sell in our market. (Photo: Renault)

Chrysler's auto workers are even more nervous than they would normally be in such dour financial times. On Friday United Auto Workers (UAW) President Ron Gettelfinger to the Associated Press that he is very concerned about even more workers losing their jobs if GM manages to take over Chrysler.

Gettelfinger added that there were step the union could take in an attempt to put a stop to the merger if it appeared likely to go through, but that it was just speculation until news of the talks was made public or the union was contacted directly.