Chrysler Parts Sale: Who Will Buy?
February 21, 2007

What if Chrysler were sold for its parts, not in its entirety? Who might the buyers be then?

Writer Paul Ingrassia makes a couple suggestions in a column in today’s Wall Street Journal in how Chrysler’s parts could be divvied up, a necessity if it were bought by a private equity firm. Jeep could go to Honda, which doesn’t have rugged, off-road SUVs. Dodge could go to Nissan, which makes sport-utilities and trucks, though it hasn’t been terribly successful with its large trucks. The Chrysler brand, with its vast dealership network across the U.S. and Canada, could go to a Chinese car company looking to quickly establish a beachhead in North America.

Ingrassia also does some intriguing math. He notes General Motors and Ford – “the Big Two” – are now worth only what Daimler paid for Chrysler alone nine years ago. “Consider that in 1998, Daimler paid more than $35 billion for Chrysler, which had about 14% of the U.S. auto market and a few international sales. Ironically, today the combined market capitalization of General Motors and Ford, which despite their troubles still have a combined U.S. market share of about 40%, is about the same: $36 billion. So the 'Big Two' now are worth only what Daimler paid for Chrysler alone nine years ago. Today Daimler will be lucky to get a fourth of what it paid for Chrysler.”

Ingrassia poses as “possibly the most intriguing scenario” to purchase Chrysler as a consortium of private-equity firms. Or, the “real long-shot buyer" -- multibillionaire Kirk Kerkorian, who was GM's largest individual shareholder last year until he sold his shares after GM rejected entering the Nissan-Renault alliance.

"Mr. Kerkorian's auto-industry strategist, Jerome B. York, once was Chrysler's chief financial officer, and the two helped deliver Chrysler into the hands of Daimler a decade ago -- a transaction on which Mr. Kerkorian made billions. But Mr. York presumably knows Chrysler's pitfalls as well as its potential, so Mr. Kerkorian is a less-likely buyer than deal-hungry private-equity firms,” writes Ingrassia.

Ingrassia knows his stuff. Now president of news strategy for Dow Jones, he is a former Detroit correspondent of the Wall Street Journal. He and Joe White, the paper’s current Detroit bureau chief, won a Pulitzer price for their auto coverage and authored a must-read book: Comeback: The Fall and Rise of the American Automobile Industry.

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