30 billion dollar mistake

But by buying Chrysler Jerkin Shrimp made DCX large enough and unattractive enough (to others) to keep his CEO job!

That's some bargain... That's like 80% off sale.... Nah... chrysler is worth more than that...

Probably not. Especially since the publicly known offers are less than the $6 billion mentioned earlier in this thread. $4.5 billion and $4.7 billion... with both expecting help with Chrysler's unfunded pension liabilities... a hefty $22 billion. Just a few days ago, the news was Chrysler would sell for about $10 billion... about 70% less than Mercedes paid... and now we're already down to less that half of that and with strings attached.

It is basically going to turn out that Mercedes is going to get some money because they need to be able to say they got at least something. But the present value of the future liabilities they assume as part of the deal is going to be more than they get. Just watch.

I can't see that doomsday scenario. Chrysler is certainly not doing that bad, it has cars that sell.... the new Sebring looks like it can take on the Toyota crowd etc. Of course talk of selling could shake up the Unions a bit... especially with a possible deal with Stronach et al... it's all talk for now.... MB stock is up, and workers might make concessions

cheers, guenter

ps even my wife is interested in the hardtop Sebring convertible, and she hates convertibles :-(

Hmmm.... well, the offers of $4.5 million are public knowledge, The unfunded pension liability amount of $22 million is public knowledge. The idea that the potential buyers are going to ask for Mercedes to assume some of the future pension liabilities is public knowledge.

Even if the potenial buyers just ask for 10%, that's $2.2 million... almost half the purchase offers. And if they're only asking 10%, why bother? I realize I'm not calculating present value of the eventual payout here, but wouldn't it be realistic for potential buyers to ask Mercedes cover, oh, say 50% of the unfunded pension liabilities?

That's why I say Mercedes will probably actually get nothing for Chrysler.

I'm sorry, but a reskinned Mitsubishi is not going to be able to take on the Toyota crowd etc.

Which actually describes the product problem: Chrysler has a bunch of attractive vehicles, but nearly every one is a low volume niche model.

Is it another Karmann job?.... (Like the Crossfire?)

DAS

For direct replies replace nospam with schmetterling

..... sure, as well Karmann also makes the convertible top for the Pontiac G6

cheers, guenter

I would be inclined to believe that analysis.

It would be dumb to buy high and sell low.

The Unions should be cutting a deal because if Chrysler gets spun off the first thing Chrysler will do is declare bankruptcy and dump that 20 billion health/pension obligation.

.

That will also dump all the share holders in stock market. I think a spin off is a much better choice for Daimler than to sell. As for the pension obligation? No judge is gonna let it all disappear.

Let's not forget this was billed a a merger of equals. But the Mercedes people lied. And what they've proven over the last 8 years is that they were **less** than equal to the previous Chrysler management. Looks like they've realized that.

Why would the union care? There's a federal program to pick that up.

Course, then Mercedes has to fund the spinoff. I think the amount of cash Chrysler had when Mercedes took over would be a fair amount.

It is interesting; I have read this on the Chrysler NG, too. I never knew what DB management had said in the US, but to me it was obviously a 'takeover'. Maybe it was legally a merger to minimise tax liabilities, but why would Merc management want to 'merge' with anyone and lose power?

DAS

For direct replies replace nospam with schmetterling

Why would Chrysler management?

Because historically the company has had a checkered financial history?

To provide the company some long-term stability?

DAS

For direct replies replace nospam with schmetterling

(The question fo Mercedes management not wanting to give up their power in a merger of equals and a presumption Chrysler management was willing to give up their power in a Mercedes takeover.)

People tend to believe in themselves. Chrysler did very well in the

90s. Why, in 1998, would the Chrysler management team believe they were like mangement teams of the past who fell quickly and decisively from success to failure, when they had both their inate self confidence and the bolstering effect of their recent successes?

How? Because they thought the Mercedes people were better managers? Because they thought Mercedes would always make a profit and thus fund Chrysler through any upcoming lean times? (Actually, its been quite interesting that for the most part when Chrysler lost money, Mercedes was making money, and when Mercedes was doing poorly, Chrysler was doing well.)

It seems to me Chrysler management went into it with the idea they were going to get some assistance from Mercedes but would mostly be in charge of Chrysler, and the Mercedes people let them think that until they ran the Chrysler people out.

Your line of thinking requires the Chrysler people to think the following:

1) Our company is real successful right now. (This is 1998 talk.) We are making tons of money, our market share is increasing, and we are rising in the J D Powers surveys. 2) Our company was nearly out of money in 90 - 91, but we pulled it out and have a huge pile of cash. 3) Despite being on top of the world, we have no confidence in our ability to continue our current success. 4) Despite the fact we were able to rescue our company from its problems in 90 - 91, we have no confidence in our ability to perform a similar feat in the almost certain event we again find ourselves in a similar situation. 5) Even though we produced a large V6 that's the best engine of its type south of Lexus territory, and we can sell it at a profit in cars priced like Buicks (the LH cars), and even though we build the best reasonably priced large FWD cars (the GM cars are terrible and Ford doesn't even try), and the best packaged minivans (although they lack a bit of refinement when compared with minivans that cost thousands more), and are about to introduce a new truck V8 (the 4.7) that will put to shame every V8 Ford and GM has... and Toyota and Nissan don't even have V8s..., and have the best selling convertible in the US, and have the most respected name in SUVs (Jeep), we did it all by accident. We actually believe we're totally inept, and the only smart thing for us to do is to stick this about to fail cash cow to the oh so smart Mercedes executives, take huge severance packages, and sit on the beach laughing. After all, this will have been the only smart thing we've been able to do by intention in our entire lives.

Now, really.

The truth is the Mercedes people looked at what Chrysler was doing, decided 1) it was easy, and 2) they could do a lot better because the Chrysler people were **obviously** making mistakes despite their success, and took over.

I certainly don't believe the Chrysler people lacked confidence in their ability and concocted a plan to stick Mercedes with a company about to fall into the dumps. But I do believe the Mercedes people thought they knew everything about the car business. Their Chrysler experience is just another kick in their butts, just like Smart and Freightliner.

For Merc as far as I can tell the main motivation was to be 'big' in the US in one hit (Chrysler sales were double Mercedes-branded cars globally, AFAIK) and, possibly megalomania on the part of some senior execs.

Maybe also the altruistic motive to get at American salaries, since those numbers are far higher than anything paid for similar jobs in Germany and around....

DAS

For direct replies replace nospam with schmetterling