Cerberus looking to unload part or all of Chrysler
The rumors flew when one of Chrysler’s key suppliers, Magna International Inc., recently hired Wolfgang Bernhard, the former chief operating officer of Chrysler. Bernhard, who worked with Cerberus Capital Management to acquire control of Chrysler from then Daimler AG in 2007, will be a consultant for the Canadian auto supplier. The hiring has now sparked talks about Magna’s renewed interest in buying the automaker.
Magna isn’t Chrysler’s only suitor. Much like GM’s intention to narrow itself down to four core brands, there has also been talk about Chrysler’s desire to thin the herd and sell off some of its key assets. Before the struggling automaker received government aid, Chrysler’s manufacturing partners Renault and Nissan had expressed some interest in buying some part or all of the company.
Currently, Chrysler plans to make pickups for Nissan, while Nissan will make small cars for Chrysler. Now that the U.S. has stepped in to aid Chrysler, it is unclear whether the sale of some of the company’s assets would deprive it of further government funding.
Meanwhile, Magna was one of the bidders for the automaker when it was sold in 2007 by Daimler AG. In the past, the supplier has expressed interest in expanding its unique complete-vehicle production business. Recently, according to sources, Magna has shown interest in purchasing an assembly plant in Belvidere, Illinois from Chrysler in exchange for long-term production contracts.
Although something appears to be brewing in this love triangle of Chrysler, Magna, and Nissan, little has been confirmed. In the meantime, Chrysler has received $4 billion of government aid and is seeking another $3 billion. In order to survive it must turn around its falling sales which dropped 53% last month.
Will further downsizing or a new owner ensure Chrysler’s future sustainability in this harsh economic climate? We will have to wait to find out.