The Carmagedonn Thread: FCA and "Consolidation"

[Philly]

Last I knew Mercedes still owned 20%. I don't know why, but they do.

I believe Diamler is giving up their stake now. At least getting rid of it.

I haven't heard. I was under the impression that the Ram --> Titan program was still on, but that the Tiida --> Versa --> Caliber (?) deal was off. I have no idea, and frankly, I think the entire thing should be scrapped.

I think the small car swap is off; Autoblog reports that a new Caliber will be built on the Bravo platform. Although I wouldn't be surprised if the Ram deal stays solid because there's probably a bit of money to be had there.

Anybody else think it's funny that everybody is talking so brightly about Chrysler's future when even two years ago we started counting down the days the company had left alive? Or maybe this will be a case of GM where we knew they were starting to have issues, and had all these plans that proved disappointing and put them in the position they're in now...

 

[Joey D]

I believe Diamler is giving up their stake now. At least getting rid of it.

You are correct, sir.

Daimler agrees to give up remaining stake in Chrysler
Hot on the heels of the Chrysler's tentative deal with the UAW to cut the automaker's VEBA obligations, Daimler AG has announced it's finally reached an agreement to unload its remaining stake in Chrysler. According to Daimler's release, the company's 19.9% stake in Chrysler will be redeemed and Daimler write off a $1.5 billion loan which will help (if it can) avoid putting Chrysler into bankruptcy and facilitate the automaker's deal with Fiat. The agreement is likely to reduce Daimler's second-quarter earnings (before interest and taxes) by around $700 million, however, the German giant had already written down its stake in Chrysler last year. The agreement also includes Daimler paying $200 million into Chrysler's pension plans once the agreements are definitive, and another $200 million each year until 2011. All the gritty details are available in the press release below the fold.

PRESS RELEASE

US-Dollar Version: Daimler reaches agreement on separation from Chrysler

Agreement with US Pension Benefit Guaranty Corporation (PBGC), Chrysler and Cerberus on pending issues
Redemption of remaining 19.9% shareholding

Daimler AG (stock-exchange abbreviation DAI), Chrysler, Cerberus and the US Pension Benefit Guaranty Corporation (PBGC) signed a binding term sheet on April 27, 2009 covering issues still pending between the parties in connection with Chrysler.

Under this agreement, Daimler's remaining 19.9% shareholding in Chrysler will be redeemed and Daimler will forgive repayment of the loans extended to Chrysler, which were already written off in the 2008 financial statements.

In addition, Daimler has agreed to pay US $200 million into Chrysler's pension plans on the date of the execution of definitive agreements and in each of the next two years. In this way, Daimler is helping to secure pension payments to former employees of DaimlerChrysler. The existing pension guaranty of US $1 billion vis-à-vis the PBGC will be reduced to an amount of US $200 million and will remain in place until August 2012.

Chrysler and Cerberus waive any claims that might arise from representations and warranties made in the transaction of August 3, 2007, including the accusations made against Daimler in 2008 that Daimler allegedly improperly managed certain issues in the period between the signing of the agreement and the conclusion of the transaction. This also applies to the accusation that incomplete information was provided on the transaction.

Following the transfer of the term sheet into the final definitive agreements, the relationship between Daimler and Chrysler will solely consist of supplier-customer relations, including limited support for certain dealer financing until the end of September 2009, as well as certain guaranties.

The effect on EBIT resulting from this agreement, which will be reflected in Daimler's financial statements for the second quarter of 2009, is estimated at up to US $0.7 billion. The payments to be made in the years 2009 through 2011 amount to US $200 million per annum.

 

[YSSMAN]

More Chrysler News

Chrysler Lenders and the US Treasury Agree to Terms

...So, basically, their debt has been reduced from $6BN to roughly $2BN. This undoubtedly should make them a bit more appealing to FIAT.

=-=-=-=-=-=-=

More GM News

The Situation Between Opel and Vauxhall is still confusing...

Yep. They still don't really know whats going on.

 

[Philly]

It should be interesting to see what the UAW wants to do to Chrysler. My guess is they'll be pushing for the company to keep more of it's plants in Michigan (or the upper Midwest) and try to keep Chrysler and FIAT from hiring too many non-union workers.

The GM and Opel thing does make a little sense. It is strange that they would split up two companies that literally have the exact same cars, but I can certainly understand them wanting to keep Vauxhall around to keep at least a small foothold in Europe.

 

[YSSMAN]

Well, I'm certainly of the mindset that if FIAT goes through with their purchase of Chrysler, that GM will hold off on letting them have Opel. I mean, it isn't as though they're giving up the entire operation, it sounds like they will still have a majority stake in the company, but they won't be in total control any longer.

 

[Tornado]

I just thought of something: How will this effect Chrysler's government contracts?

 

[Jim Prower]

Hang on, what do you mean? They're doing something for the Military? I thought HMMWVs were only made by AM General.

Besides, it'd probably be no different than when Chrysler was owned by the Germans. Unless you're talking about bailout loans.

 

[Tornado]

Last I knew, they do those Wrangler diesels for light duty military work.

 

[Philly]

As long as it's still built by an American company, and designed and built in America, I doubt the government will have too big of a problem with it. Chrysler will still be an American company. Plus, the UAW is getting the majority stake, so it won't even be "owned" by a foreign company. And it helps that FIAT is still from a NATO country...

 

[YSSMAN]

Don't forget that the Treasury will likely have a stake in the company too, just like they probably will with General Motors. I wouldn't see their government contracts ending just because FIAT is a partial owner.

=-=-=-=-=

In Yet Another "Oh Crap" Moment:

Honda Loses $2.91 Billion in Q1 2009, First Loss in 15 Years

Ouch. To actually think that Ford did better by comparison, that's just amazing.

 

[Eric.]

Don't forget that the Treasury will likely have a stake in the company too, just like they probably will with General Motors. I wouldn't see their government contracts ending just because FIAT is a partial owner.

=-=-=-=-=

In Yet Another "Oh Crap" Moment:

Honda Loses $2.91 Billion in Q1 2009, First Loss in 15 Years

Ouch. To actually think that Ford did better by comparison, that's just amazing.

Not too surprised about that...I know they've had to stop production for short periods at a couple of factories and I haven't seen that many 2009 Civics or Accords anywhere

 

[Philly]

Ouch. To actually think that Ford did better by comparison, that's just amazing.

They did worse than Ford without the new Fusion, Taurus, Focus and Fiesta on the road? That's pretty impressive for Ford. It would be pretty cool if one of our local Detroit automakers can out-do some of the Japanese companies.

 

[homeforsummer]

It's probably because gas prices are low at the moment and people aren't scared of buying the slightly more thirsty cars. That has to be a killer for Honda, who kind of pride themselves on building fuel efficient vehicles. Though funnily enough, I'm sure I read somewhere that J Mays actually wants fuel prices to be higher, as in back how they were last summer for you guys at $4 a gallon and over here in the UK at well over £1 a litre.

 

[Tornado]

It's probably because gas prices are low at the moment and people aren't scared of buying the slightly more thirsty cars.

I don't think that is the case. People aren't really buying anything at the moment, and the even the threat of $4/gallon gas seems to be keeping many people from buying fuel suckers when they aren't sure that they can afford to eat.

 

[YSSMAN]

Well, Ford did launch the new F150 which I assume was a small part of that. Plus, they've avoided taking the big loans (ie, bad press), and have had a lot of positive attention over the new Mustang, new Fusion, among others. I mean, they still lost $1.6BN last quarter, but its still pretty good by comparison.

Side thought:

I came across my first 2010 Fusion today at the local Ford dealer, and the idiots did exactly what I hate: Order a fully-loaded SEL AWD V6 model and park it right out front, and then lie to you about how they sell cars. God I hate Fox Ford...

=-=-=-=-=-=-=-=-=

Breaking [RUMOR] News

Obama to Announce Chrysler Bankruptcy Tomorrow (4/30)

According to the Bloomberg source, the deal isn't inked, and Chrysler will be forced into bankruptcy while final details are being hashed out.

Opinion: FIAT is doing this to get the company for less. Srsly.

 

[Philly]

The question is: Why wouldn't they? FIAT has nothing to lose, and much to gain in that situation. It's the same product, but cheaper.

And since I'm guessing FIAT is mostly after Chrysler's assets, it makes more sense to bring the company down to something that's more in line with what they're trying to get out of the deal.

 

[JCE]

If FIAT makes this deal and some how manages to actually get Dodge and Chrysler to put badges on some slightly reengineered Euro FIATs I can see that as being a good thing. And if they allow FIAT to do the designing of the new vehicles across the board maybe Chrysler can redeem itself. After all if it wasn't for Jeep and Mercedes-Benz Chrysler/Dodge would be 100% worthless. Thanks to Merc they had a good platform to use for the Charger/Challenger, and of course Jeep makes the Wranger and Cherokee which don't suck.

Offtopic alert: I swear if I see or hear Obama's name one more time I'm going to throw up. I'm sick and tired of seeing and hearing his name every five F'ing seconds on the TV, radio and at the "watercooler" at work. He personally isn't going to do anything. His advisors and congress is going to do the real decision making. He's just a face and puppet like McCain would of been had he won. [/rant]

 

[Beerz]

Obama?

 

[Tornado]

After all if it wasn't for Jeep and Mercedes-Benz Chrysler/Dodge would be 100% worthless.

If it wasn't for Mercedes-Benz, Chrysler wouldn't be in trouble at all.

 

[Joey D]

If it wasn't for Mercedes-Benz, Chrysler wouldn't be in trouble at all.

Eh I don't know about not being in trouble at all, however they probably wouldn't have to be filing for Chapter 11 today. I still think Chrysler would be facing trouble.

 

[TheCracker]

If it wasn't for Mercedes-Benz, Chrysler wouldn't be in trouble at all.

No you're right, they'd have ceased to exist a long time ago.

That's perhaps not quite the case. They were strong at the time of the acquisition, but they'd already set in motion certain steps that probably would have led to fail even before DaimlerBenz started fannying about with their finances etc.

 

[Tornado]

Eh I don't know about not being in trouble at all, however they probably wouldn't have to be filing for Chapter 11 today. I still think Chrysler would be facing trouble.

You're quite right. It would probably be more of a Ford "We totally aren't worried at the moment" trouble rather than the "abandon ship!" variety that GM has, though.

They were strong at the time of the acquisition, but they'd already set in motion certain steps that probably would have led to fail even before DaimlerBenz started fannying about with their finances etc.

Chrysler didn't even start the "All SUVs all the time" crap until long after under Daimler ownership. The Caliber, Sebring and Compass also came about far too long after the buyout for it to have actually been Chrysler decisions, and the Caliber in particular very strongly shows the differences in management compared to the 2nd Gen. Neon. The $3 billion "Gift" from Chrysler to Mercedes and the other shenanigans only made things worse.

 

[YSSMAN]

Updates as they come:

Chrysler Bankruptcy due to Collapse of Discussions Overnight

UAW "Ownership" =/= Control

President Obama is expected to announce the bankruptcy at Noon today, we'll see what happens.

 

[Delirious]

Quote from breaking news box on CNN

Obama: 'Every dime of taxpayer money will be repaid' before Fiat takes control of Chrysler. Fiat has agreed to transfer technology.

NEW YORK (CNNMoney.com) -- Chrysler LLC is going to file for bankruptcy "almost immediately," a senior Obama administration official said Thursday. But a deal has been reached to combine the company with Fiat that will allow Chrysler to stay in business.

 

[YSSMAN]

Obama Announces Chrysler Bankruptcy

President Obama has just concluded a press conference where he announced that Chrysler will indeed head into Chapter 11 bankruptcy proceedings almost immediately. As part of the same announcement, he noted that the Auburn Hills automaker has reached terms with Fiat and will be headed into a partnership agreement that will include a cash infusion and technology transfers. By some estimates, the restructuring is expected to take 30-to-60 days.

Keeping an upbeat tone in his announcement, Obama also reassured Americans that they will be repaid in full before Fiat gets any stake in the automaker, and that GMAC has agreed to step in to provide loans for Chrysler vehicles. Canada is also pitching in to make it work.

Finally, in related news, it is being reported that Chrysler's Bob Nardelli (whom Obama praised during the press conference) will exit the company after the bankruptcy filing is complete.

Excellent. Ish.

I'm happy that we finally know what is going to happen, particularly with the FIAT involvement. The 30-60 day bankruptcy certainly is extremely short-term, which really makes me wonder what FIAT would have in mind come the end of the year. That, and I agree with Nardeli stepping down. I've never much liked the man...

 

[Tornado]

Okay, Nardelli's gone. But is Press staying?

 

[Leonidae]

this means that US will get 500, Brera, MiTo, 159 etc etc, right?

 

[Jim Prower]

Hopefully, in some form or another. I'm guessing that, if the 159 shows up, there'll be Avenger/200C versions as well, and hopefully those will be significantly different from each other. 500, MiTo are very similar, Brera would be Alfa-only. (and possibly Euro-only, unless VW decides to bring their not-coupe-but-wide-hatchback Scirocco to the US.)

I'm hoping that the RWD sedan program of the 300C and Charger continue, as well as development of the HEMI V8. At this point I'd even let them label a DOHC engine a HEMI.

 

[YSSMAN]

Okay, Nardelli's gone. But is Press staying?

Nardeli is there for the next 30-90 days, and after that, I'm guessing we see an Italian at the helm. But, in all honesty, I'd rather see Jim Press running the show. The guy knows what he is doing, and losing him would be a big loss for Chrysler-Fiat.

this means that US will get 500, Brera, MiTo, 159 etc etc, right?

Nothing has been confirmed, yet. It seems to be a near-certainty that we will get the 500 as a FIAT, not as a Chrysler. It would seem somewhat likely that we could get the Panda as well, but that remains to be seen. Chances are going to be that we get the Grande Punto as a Chrysler, in some way/shape/form, and presumably the Bravo as well.

As for the Alfas, my guess is that we see them join a select few FIATs, and end up going on-sale in some Chrysler/Dodge/Jeep dealers as themselves. The 159 and Brera would seem the most-likely, but as I recall, the MiTo doesn't have the OBDII ports needed to pass US inspections.

 

[Philly]

Interesting. It looks like the whole thing should be pretty smooth, with the relative brief time in bankruptcy. I wonder what we'll see changed besides Nardelli and losing a few dealers.