Chrysler: Talked to Fiat, Done - For Now - with Nissan
By Michelle Krebs August 13, 2008By Bill Visnic
TRAVERSE CITY, Michigan - Chrysler LLC, the ever-leaner, venture-capital-owned automaker that seems to be engaged in joint-development and -manufacturing deals with players from all over the globe, has had talks with the Fiat Group - known to be exploring options for North American manufacturing - said Chrysler vice-chairman and president Tom LaSorda at a media event here.
For now, he said, that's all it was: talk.
As Chrysler sheds excess manufacturing capacity, the company has assembly plants that could be judged as "in play" in one form or another for a company seeking U.S. manufacturing facilities. Today, in fact, LaSorda said the company has to date identified some $1 billion in non-earning assets that could be sold.
Chrysler also is part of an engine-making joint-venture assembly plant that also is known to have considerable available capacity - and has attracted interest from foreign automakers.
"Has Fiat approached us? Yes," said LaSorda at a media roundtable during the annual Center for Automotive Research Management Briefing Seminars here.
"The fact is, they've approached many companies," he added. He said there were "no formal discussions" between Fiat and Chrysler, "but there was an inquiry."
Also in the realm of alliances, LaSorda confirmed senior Chrysler officials are headed to Japan next month to view the final design of the B-segment compact car Nissan Motor Co. Ltd. will build for Chrysler to sell beginning in North America and other markets in late 2010.
The car is not a derivation of the existing Versa compact and presumably would be sold at a price point beneath that of Chrysler's Caliber compact. The Nissan-built Chrysler could be a production version of Chrysler's well-received Hornet concept car.
But pressed for whether this and the two companies' recent deal that has Chrysler building for Nissan the next-generation Titan full-size pickup (circa 2011) - along with recent rumors Chrysler has talked to Nissan about selling a version of the successful Altima midsize sedan - are signposts for a larger merger with Nissan, LaSorda demurred, saying, "We agreed to the OEM (product exchange) deals. And that's where the discussion stopped."
Asked directly if, by engaging in activities such as identifying saleable assets and having others build cars that will wear Chrysler badges, hedge-fund owner Cerberus Capital Management is grooming the company for a sell-off, La Sorda was dismissive:
"Cerberus has owned us for a year and 10 days," he said, insinuating Cerberus' ownership term has been far too short to be prepared to sell such a complex, integrated manufacturing, marketing and sales company as Chrysler. Besides, he said, nobody would buy an full-line automaker in today's poor economic market.
But LaSorda does seem to offer a possible portend, saying, "The (Chrysler) brands are worth a lot of money."
LaSorda says Chrysler's senior management doesn't get involved in such possibilities. "We're busy enough trying to turn the place around."
LaSorda used the conference as the stage to announce that Chrysler will spend $1.8 billion to retool and expand its downtown Detroit assembly plant that builds the Jeep Grand Cherokee. LaSorda told reporters the next-generation Grand Cherokee will be more of a crossover, is due out in 2010 and will retain Grand Cherokee characteristics as well as the name.
In other matters, LaSorda said:
⢠Inventory levels, for the past couple of years a persistent problem for Chrysler, are at planned levels - including for the Ram pickup. Rival Ford Motor Co., which was scheduled to launch this fall a heavily revised F-150 at the same time Chrysler is introducing an all-new Ram, delayed by two months the F-150 rollout in order to deplete bloated F-150 inventories.
No such trouble at Chrysler, LaSorda insists. The company is "right on plan to take old-truck inventory down." And, "We like the fact Ford delayed," he added, saying Chrysler won't have to battle a marketing war with competing new-pickup sales launches.
⢠More suppliers will be "consolidated" by year-end. Other sources at MBS here echo the belief many industry suppliers remain at imminent risk and either face bankruptcy, consolidation/merger with others, or restructuring.
⢠More than 80 percent of incremental industry sales in the next decade will occur outside the U.S., and the BRIC countries - Brazil, Russia, India, China - will absorb some 15.4 million more sales in 2018 compared to 2006 levels.
⢠Soaring raw-material costs will see suppliers' locating their production plants closer to the source of those materials instead of at the end of the supply chain.
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