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Nissan proposes acquiring 20 percent of Chrysler

10/22/2008, 10:39 AM

By Andrew Ganz

Cerberus Capital Management LC now has a second serious offer to consider for divesting itself of Chrysler LLC. The Renault-Nissan alliance headed by CEO Carlos Ghosn has proposed to acquire 20 percent of Chrysler using Nissan’s cash on hand, likely between $10 and $12 billion. Ghosn’s proposal would keep the Chrysler, Dodge and Jeep brands alive – unlike what most analysts predict would happen should General Motors acquire Chrysler LLC.

Japan-based Nissan would actually own 20 percent of Chrysler under the deal because it has the money reserves to make the purchase. Once cash-flush Renault is now about $5 billion in debt, though despite turmoil in the industry, things are generally looking up for the French automaker.

Renault-Nissan says that Chrysler would serve as a partner in the alliance with minimal job losses. The French-Japanese partnership says that it would retain Chrysler’s three brands in North America as it looks to expand purchasing, joint vehicle development and distribution.

Many Nissan investors opposed the 2006 plan to acquire a stake in General Motors and it’s unclear how they’ll feel about Nissan getting involved with Chrysler. Ever since Ghosn – a former Renault executive – was sent to Japan to turn around Nissan, he has expressed interest in a full partnership with a Detroit automaker. It appears that now that Ghosn may be Chrysler’s last chance for survival.

Nissan and Chrysler are no strangers. The two automakers are working on several joint projects, including a plan for small Nissan-developed, Chrysler-badged cars and a Dodge-developed, Nissan-badged Titan pickup replacement.

Chrysler and Renault are hardly strangers, either, given that Chrysler purchased American Motors Corporation (including Jeep) from a Renault-AMC partnership in 1987.

Cerberus CEO Stephen Feinberg is said to still be in favor of turning over full control of Chrysler to GM, however. According to the Detroit News, Feinberg thinks it would be the best solution overall for the auto industry. Still, it’s impossible to ignore that full GM control would release Cerberus from Chrysler LLC entirely – a major benefit for Feinberg but not for Chrysler employees whose jobs would be cut or the historic brands.

Or, in the eyes of many analysts, for General Motors, which is coping with its own struggles to downsize.

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10/22, 10:49 AM

posted by:

Borat

Threesome anyone?

10/22, 11:08 AM

posted by:

mister_d

I would be more comfortable with Nissan than with GM. Lets face it, GM has its own problems and adding Chrysler to the mix would certainly be a recipe for disaster. GM’s own board is not hot about this merger. Nissan, if my memory serves me right, has a deal with Chrysler over trucks and vice versa over small cars. GM = NO WIN, NISSAN/RENAULT = WIN WIN!

10/22, 11:21 AM

posted by:

lightning count

eh…lets hope not, don’t want chrysler poison nissan
VQ > HEMI

10/22, 11:51 AM

posted by:

hecti

this is really good news
i would love to see this go through and agree with mister_d
its a win win for both companys

10/22, 11:52 AM

posted by:

gitcypher

So what would Porsche say about lap times from the GTR and Vette?

10/22, 11:55 AM

posted by:

gitcypher

…I clearly read that as “20 percent of GM”. Reading & comprehension & pictures. I guess I use Both sides of my brain.

10/22, 11:56 AM

posted by:

johnnycanuck

I think I just experienced my first real orgasm.

10/22, 11:57 AM

posted by:

ricky_b

more like a “Megane” a trois than a threesome.

might not be a bad thing. Nissan could then dump truck platforms to Chrysler and Chrysler could dump small car platforms to Nissan.

10/22, 12:27 PM

posted by:

JakeK66

Nissan would clearly be the better buyer for Chrysler, NO QUESTION for the brands of Chrysler and the know-how of Nissan it would work….

BUT, if GM is really that bad off, and it’s true they could go completely under, the GM-Chrysler merger may end up saving the most jobs as it would theoretically save GM by the cash reserves Chrysler is holding and effectvely deleting a domestic competitor and it’s brand line (maybe save Jeep), but this would be a devestating event that never would look possible until now.

10/22, 12:33 PM

posted by:

nickkop

nissan-renault is the better deal in my eyes as well… as far as GM buying chrysler, if anyone goes under it should be GM, they have the worst (quality) cars, im sorry…

10/22, 12:50 PM

posted by:

Catiadesigner

To be brutally honest, there is absolutely nothing good in this for Renault/Nissan.
It would be better for all parties concerned to let Chrylser do what its management has been trying to do for twenty years, let it die in peace.
Its just like the Rover debacle all over again, Can none of the ‘management’ team at chrysler understand the very simple concept that if they keep producing garbage vehicles people are not going to buy them.

10/22, 1:06 PM

posted by:

WAYNE WEATHERSBY

MAKES YOU WONDER WHAT EVERYONE WILL TALK ABOUT AFTER THE WRITERS KILL OFF CHRYSLER? NEVER SEEN SO MANY PEOPLE EXCITED ABOUT 30,000+ PEOPLE POTENTIALLY LOSING THEIR JOBS??? EVEN IF YOU DON’T LIKE THE PRODUCT…IT IS AN AMERICAN<<<< COMPANY!!!!! I GUESS AS SOON AS WE ARE DONE SOCIALIZING THE COUNRTY ( GOVERMENT OWNED BANKS-AND WELFARE CHECK RAISES) WE CAN WATCH THE JAPANESE AND CHINESE HAVE THEIR WAY WITH US! YOU KNOW GM TAKING CHRYSLER OVER IS A SCARY THOUGHT, THEY BUILD CRAP (EXCEPT MALIBU) AND THEY CAN SAY THAT THEY WOULD SLASH THIS PRODUCT AND THAT PRODUCT?? MAN THEY HAVE SOME STUFF THAT SHOULD BE BURIED IN THE PASTURE SOMEWHERE?? , LET’S QUIT WISHING THE DEATH OF AN AMAERICAN COMPANY THAT ACTUALLY BUILDS A DECENT CAR, AND THE BEST TRUCK ON THE ROAD!!

10/22, 1:14 PM

posted by:

Catiadesigner

Wayne, unfortunately it is that attitude, so eloquently displayed by your good self, that has contributed the state of the US auto industry.
Simply saying things are good because they are built in America doesn’t wash anymore, and the consumer has spoken, either adapt, and produce vehicles that can compete on their own merits or don’t and close.
Its really very simple.
It was the attitude that the British auto industry clung too for far too long and look where it got them, Yes eventually people did get fed up of buying domestically produced vehicles that were inferior to the imported vehicles and now Britain doesn’t have a car industry.

10/22, 1:46 PM

posted by:

hecti

you know how japan puts a limit on how many cars we can export to japan,
we should do the same to them, block their imports and save our economy before we worry about the wellfare of another country, plus japan bombed us so we have a legit reason to fcuk them over too…again

10/22, 1:46 PM

posted by:

WAYNE WEATHERSBY

See, i have a GM store as well as a Chrysler Dodge Jeep franchise….and so all you experts know, For the past 2 years my Warranty work in my Chrysler service department is down 36%, i have actually never seen in the 17 years my chrysler techs with very little warranty work to do? Now our GM techs are busy…and i mean some ridiculous stuff, that chrysler has never had to put up with. So my near by Toyota frnachise has only got 36 service bays, that never seem to be empty???? So i guess they just put them in the air for fun???

10/22, 2:29 PM

posted by:

t-ak-box

“you know how japan puts a limit on how many cars we can export to japan,
we should do the same to them, block their imports…. ” by hecti

Your right we should. The only problem is they own so much of our debt that we can’t do that. We would only hurt our selves more. So we let them on to our shore to sell their goods, we do athe same withthe cinese and the Europeans. Until America reestablish itself and stops being a debtor’s nation can we ever tell the Japanese, Chinese, European and any other nation anything or what they can or cannot sell in our country.

About the rest your pretty off base.
.

10/22, 3:12 PM

posted by:

Astonman12

I like this idea much better.

10/22, 3:39 PM

posted by:

Markus

This situation has left not only Detroit shaking in its boots, but suppliers and approximatately 4000 dealers shaking also. When the media considers job losses they have not considered the domino effect this will have if a GM-Chrysler merjer goes through. This will hurt local economies and local families as well. There is no good answer here, but for Chryslers future a merjer with Renault/Nissan would seem the best fit and the least damaging for all concerned.
As for the question of quality, Chryslers quality is the best it has ever been. I have been a Service Director for Chrysler for years and I can tell you that Warranty work only comprises about 20% of my business. 65% is Customer Pay on older cars and Maintenance, the remaining 15% is Used Car reconditioning. You could compare that to the late 70’s and 80’s where 50% or better was warranty. That is not to mention that warranties in that time were much less in duration than they are now.

I do not know how those statistics compare to GM or to imports for that matter. I can tell you this though, domestic manufacturers have been much less demanding on customers to maintain their vehicles versus the major imports(Honda, Toyota, etc). Recently, they have had a ramped up efforts(last couple of years), but for the most part, maintenance empasis has fallen short. I would be curious to know how domestics would stack up with imports in reliability, in the eyes of the media and consumers, if they were maintained in a similar fashion. Don’t get me wrong, many people do a fine job of maintaining their domestics vehicles, but over-all not as well as import owners.

For now, I will hold on tight and hope for Renault/Nissan to step up and make things happen. Hopefully GM will realize it need to take care of it’s own problems before they can move forward.

10/22, 3:39 PM

posted by:

yarddog82abn

NISSAN….you can do it….ALL NIGHT LONG…..

10/22, 4:06 PM

posted by:

GM CEO

A Viper ACR VSPEC or a Nissan V10 AWD ACR.
IM SOOO SCARED..no really,

10/22, 4:43 PM

posted by:

WAYNE WEATHERSBY

A chrysler 300 with a nissan designed interior??

10/22, 4:46 PM

posted by:

WAYNE WEATHERSBY

The truth is, I have personally seen the next generation 300C, Charger,Grand Cherokee,Durango, Hornet….these are the most amazing vehicles i have ever<<<seen, they blow the nicest imports on the market away!! Ralph Gilles has done an amazing job with the next gen cars…..people will be blown away.

10/22, 4:48 PM

posted by:

pavlindrom

Isn’t it funny how American businesses have abused the NAFTA and took the jobs out of America, kept the prices the same, even with inflation taken into account, and expect Americans to buy their products. Americans can’t, since they don’t have money. And as America starts to go down, the whole world goes down economically. Still, Americans are richer, and they buy stuff from Japan since it’s more reliable, and take money out of the country, and the end of it? Nothing else but global economy. You can’t take money out of this world, you can’t spend it on the moon, so here you go: your solution. One government. Now, find Antichrist and have fun. How everything turns out just like that much hated book prophesied hundreds of years ago. Wake up now, or it will be too late.

Thank you.

10/22, 6:00 PM

posted by:

olds307

GM, Chrysler and Ford make GOOD cars, as well as Toyota and Honda……. Nissan and VW make CRAP.

10/22, 6:20 PM

posted by:

zoomzoomer

Nissan is already planning to utilize Chrysler platforms for the next full-size Titan and probably Armada.. and is already developing two small cars for Dodge based on their own Versa and Sentra. So this deal would make the most sense, not to mention giving Renault control of Jeep once again.

10/22, 7:32 PM

posted by:

Catiadesigner

@WAYNE WEATHERSBY
“I have personally seen the next generation 300C, Charger,Grand Cherokee,Durango, Hornet”
Now I know you are being a little economical with the truth, There is no next gen Durango, the 300c is hardly a next gen, unless you’re talking about the 2012 ish one and I would imagine that’s still clay, Everyone has seen the charger, haven’t they?, The next grand cherokee is in big trouble since they decided to add 12 inches or so to cover the demise of the commander so I doubt very much that you’ve seen that and the hornet is just a concept, there is nothing being designed at CTC that small. Come to think of it there’s nothing being designed at CTC at all, that’s the union sink hole after all.

10/22, 8:03 PM

posted by:

DrFill

Why would Renault pay $10-12B to have 20% of nuthin’?
Chrysler is as dead a chicken in a Boston Market rotisserrie
They are just waiting to be eaten.
Cerebrus should JUMP at this deal, if Nissan-Renault is dumb enuf to do it.
What can they do with 20% of a dead company?
They can’t make that much money back
They can’t make proxy decisions.
Stupid is as stupid does.
DrFill

10/22, 10:20 PM

posted by:

441Zuke

it’s a fire sale

10/22, 10:31 PM

posted by:

Architect

DrFill….

Why do you infer that Chrysler is “nuthin” as you so eloquently stated? I believe that it wasn’t too many years ago that they were the most profitable car company on the planet – to the extent that the world’s foremost luxury car maker bought them! The market has changed of course, but Chrysler is making better vehicles now then they’ve ever built prior. Certainly there’s more value, heritage and potential here than numerous other automotive companies we could name.

10/23, 5:18 AM

posted by:

GM CEO

Architect…Chrysler is a bitch ass company. I’ll buy it out tomorrow if I liked. You need to learn nobody buys Chrylers unless your a delievery company, taxi company or a short school bus. HUR.

BUT I rather do the dance of death together with Chrysler as we die together.

 
 
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