Topic: Who goes bankrupt first?

[initial_D]

Who is on first? Sounds like a not very funny punchline here.

[PJungnitsch]

Like quite a few of you here no doubt, the only way I would touch a Chrysler product would be with a short term lease.

Which of course is exactly what you can't get. I wonder what happens with a 72 month purchase finance plan if the company goes belly up?

Dunno what is going to happen. After 50+ years of a steady 'big three' situation, the farm equipment industry has been going through a huge shakeup for decades now.

The results have been interesting. The 'Toyota' of the industry, John Deere, continued steadily, but the others have gone through a bewildering number of takeovers and amalgamations. But because of new players entering the business and some clever linkups and partnerships by the 'Chryslers' to stay alive, today there is more choice then ever.

As already mentioned, Chrysler is looking at some pretty exotic partnerships:

 DETROIT (Reuters) - Chrysler is in talks to lease U.S. production capacity and share retail distribution with Fiat  (nyse: FIA -  news  -  people ) SpA , allowing the Italian automaker to return the U.S. market for the first time in 25 years, people briefed on the talks said Wednesday.

Chrysler, the No. 3 U.S. automaker, has also been in discussions with India's Tata Motors Ltd (nyse: TTM - news - people ) about selling its Jeep Wrangler SUV in India and possibly other Asian markets, said the sources, who were not authorized to discuss the negotiations.

A spokesman for Chrysler, which is controlled by private equity firm Cerberus Capital Management LP, declined to confirm the talks.

A Tata representative had no immediate comment. Cerberus and Fiat representatives could not be reached immediately.

Fiat Chief Executive Sergio Marchionne, credited with steering a turnaround behind the Alfa Romeo, Lancia and Fiat brands, has said Fiat is looking for a partner for its return to the North American market.

Fiat is riding the popularity of its Fiat Cinquecento (500) compact car in Europe and Brazil.

A Chrysler tie-up with Tata could potentially open a new market for the Wrangler, the best-selling model from the brand widely seen as Chrysler's strongest.

One investment banker, who declined to be identified, said it was likely that a product-centered tie-up with Chrysler could lead to a larger deal over time.

"You could definitely see this evolve into something," the banker said. "It would make sense for Tata to buy Jeep if this partnership went through ... and Chrysler could really do with selling a brand and getting some cash."

ELECTRIC TALKS

Fiat and Tata already have a partnership. Fiat agreed this month to handle the financing in Europe for Tata's Jaguar and Land Rover brands, while Tata said it was open to Fiat selling Nano, the world's cheapest car with a price just above $2,500.

Tata and Chrysler are already cooperating on developing an electric vehicle. Tata said in January that "exploratory discussions" had begun with Chrysler over sales for a battery-powered version of its Ace mini-truck.

Chrysler is continuing those talks after reaching a memorandum of understanding for the negotiations, one person familiar with the automaker's plans said.

Tata, which controls about 60 percent of India's truck and bus market, has global ambitions and an emerging line-up that runs the gamut from luxury to the sold-out Nano.

By concluding a deal with Tata, Chrysler also could look to sell a version of the Jeep Wrangler to the Indian military, another person familiar with the talks said.

http://www.forbes.com/reuters/feeds/reuters/2008/07/30/2008-07-30T223915Z_01_N30508013_RTRIDST_0_CHRYSLER-ALLIANCE-EXCLUSIVE-UPDATE-3.html

[Sir Osis of Liver]

Should be a "none of the above" option in the poll.

PJungnitsch has it right. If things look really dire I'd bet dollars to doughnuts that a "white knight" steps in looking for entry to the North American market.

[Baron von Raschke]

The only thing that I can see helping Chrysler is Chery...which is pretty sad itself!

Perhaps Chrysler's sad-state will force them to bring Chery along quicker and give Chrysler a big price advantage in the US?

Sadly, Chery will only help so much.  GM bought Daewoo awhile back and they are still in the red despite offering the Aveo and Wave. 

[safristi]

..Red Cherys.....Mmmmm.........   but Pondicherry is better than TaTas....

[Wolfe]

I just don't see Ford going under without a fight. My sense is that Ford is the only one of the three thaking things seriously and really fighting to stay alive.

Ford is in a somewhat different situation than the other 2 because of the Ford family's control of the company. The Ford family control 40% of the voting rights but only own a fairly small part of the company (<6% IIRC). If Ford files for bankruptcy the Ford family would almost certainly lose their voting control of the company forever and I'd bet that they'd do almost anything to avoid that.

Ford woke up to the fact that they were in serious trouble a couple of years ago and have taken major steps to restructure the company. They refinanced quite a bit of debt to push maturity dates beyond 2011 and raise cash to invest in the restructuring then they went out and recruited Alan Mullaly to make the restructuring work. Whether or not they'll be successful won't be known for a couple of years yet.


GM is widely held and as such is effectively controlled by the management who have shunned any accountability for their failures for years. Remember how the Board of Directors stood aside and let management brush off Kirk Kerkorian's restructuring proposals. Kerkorian owned about 10% of the company at the time but even so management was easily able to continue with business as usual.

Chrysler OTOH does have very actively engaged owners but I highly doubt that Cerberus was ever really in it for the long term. That's just not how private equity firms usually operate. Buying Chrysler was just another deal. If things go really bad they'll bail, they simply won't throw good money after bad.

[rrocket]

It has to be Chrysler.  I think I read somewhere that 90%+ or Chrysler sales were North America domestic sales.  At least Ford and GM have a presence in world-wide markets....

[G0dspd]

Chrysler has a lot of partnerships ... Tata, Fiat, Nissan, Chery, etc.  I don't think it will save them from going down the drain though.  They need a few solid and attractive hits but I haven't seen anything interesting coming down the pipe lately.

Ford is coming with that ecoboost thing but it's the european models that are really gonna help. (Focus, Fiesta, S-max)    Please take Mercury out of its misery and don't turn the brand into cheap Lincolns that are "better" than Ford.   

GM needs to make the Volt myth a reality ... not some P.R. BS to make them look good.

[ArticSteve]

Ford is in a somewhat different situation than the other 2 because of the Ford family's control of the company. The Ford family control 40% of the voting rights but only own a fairly small part of the company (<6% IIRC). If Ford files for bankruptcy the Ford family would almost certainly lose their voting control of the company forever and I'd bet that they'd do almost anything to avoid that.

Ford woke up to the fact that they were in serious trouble a couple of years ago and have taken major steps to restructure the company. They refinanced quite a bit of debt to push maturity dates beyond 2011 and raise cash to invest in the restructuring then they went out and recruited Alan Mullaly to make the restructuring work. Whether or not they'll be successful won't be known for a couple of years yet.


GM is widely held and as such is effectively controlled by the management who have shunned any accountability for their failures for years. Remember how the Board of Directors stood aside and let management brush off Kirk Kerkorian's restructuring proposals. Kerkorian owned about 10% of the company at the time but even so management was easily able to continue with business as usual.

Chrysler OTOH does have very actively engaged owners but I highly doubt that Cerberus was ever really in it for the long term. That's just not how private equity firms usually operate. Buying Chrysler was just another deal. If things go really bad they'll bail, they simply won't throw good money after bad.

great post 

[Schmengie]

It's looking more and more like GM will go first. Today's story on GM's $15.5 BILLION US  loss is mind boggling. How long can they keep this up?

http://www.cbc.ca/money/story/2008/08/01/gm-loss.html

[initial_D]

Non-North America GM operation have a net revenue of $21Billion ... losses at NA last quarter is $15B ... Net cash on hand is roughly $21B, not sure about credits ... doesn't look good at all.

[barrie1]

You have to remember that thats only North America as they are making decent profits from the rest of the world. Its only The one sector thats losing money and they are still making more then they are losing every year. 

[safristi]

  That's like Steven Hawkins sayin' he's ready for the Olympic 100 Metres....

[Ice]

Chrysler....they don't have any new real products on the horizon at this moment, their interior quality is terrible, and they don't have any foreign market products/brands they can rely on.

Ford has Ford Europe which seems to be doing well and is in good shape making some cool cars that they could bring over if they put their minds to it.  They have a new set of engines arriving very shortly that could be promising.  If they put those two together I think they will be in good shape.  New global Focus, the Fiesta, and some sort of F-150 rejuvenation (which still sells somewhat well), and some sort of Fusion/Mondeo bread and butter midsize and they could be doing alright.

GM has potential as well...they need to ditch about half of their brands, combine a few, and keep doing what they have been for the last year.  Cruze interior looks good...exterior looks good...if they can get the quality and performance (fuel economy and decent handling) right then they have a winner there. Astra is good...just needs attention marketing wise...even so I've been seeing allot of them here recently.  Keep Chevy, make Pontiac performance only (G8, etc.), use Saturn to bring over European models almost directly, figure out something between Cadillac and Buick...leave it at that.

All three need to seriously trim their lines, get rid of badge engineered cars, focus on small and mid-size sedans and small trucks, and then work their way up to the people movers again.  Everyone needs a people mover but why can't we have smaller and larger people movers like a Mazda5/Kia Rondo and then have a larger vehicle like the Flex/Acadia.

Thats how I see it anyways.

[ovr50]

You have to remember that thats only North America as they are making decent profits from the rest of the world. Its only The one sector thats losing money and they are still making more then they are losing every year. 

http://media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm.com/gmnews/viewmonthlyreleasedetail.do?domain=74&docid=47617

Barrie needs to understand that when GM corporate reports earnings as they did in the attached link above (an actual GM website release) that they are reporting TOTAL and ALL operations; ie. NA, Europe, Asia, etc. GM is headquartered in the US and their report must, by rule and accounting rule, include all operations of GM worldwide. So, their reported losses are NOT just NA operations, but their entire worldwide results.

Thus, Barrie's fanboy claim that this loss is NA only and they are making money elsewhere is only true to the extent that the NA losses are greater than any other losses, and overall, worldwide they reported near-record historical losses. They are making some money in other markets, but it is totally wiped out by NA operations; and the loss reported is FOR THE WHOLE GM COMPANY.

 

And as to the statement that GM is making more than they are losing - that statement is NOT CORRECT and reflects a basic lack of understanding how companies report their earnings. Totally wrong but likely falls into the catagory of wishful thinking; not reality.

[duck]

Chrysler Financial says renews lines of credit

http://www.forbes.com/feeds/ap/2008/08/03/ap5283586.html

[barrie1]

Sorry Ovr when I read that someone made 21.5 Billion and then lost 15 billion it usually leaves them with around 6.5 billion profit in the same year. THe US to be losing that much money is very sad to begin with. How can you sell around 9 million vehicles world wide and not make money? Not charging enough perhaps or too much greed on the top end.  The worst mistakes they make are closing their best factories and not admitting their errors. They are building some extremely great products right now but buyers like you would rather support other Countries instead. When is the last time you bought a GM product? 

[ArticSteve]

I read that someone made 21.5 Billion

 

Who would that be 

[von_khan]

I read that someone made 21.5 Billion

 

Who would that be 

I love the broad brush strokes.. someone... 

[ovr50]

Sorry Ovr when I read that someone made 21.5 Billion and then lost 15 billion it usually leaves them with around 6.5 billion profit in the same year. THe US to be losing that much money is very sad to begin with. How can you sell around 9 million vehicles world wide and not make money? Not charging enough perhaps or too much greed on the top end.  The worst mistakes they make are closing their best factories and not admitting their errors. They are building some extremely great products right now but buyers like you would rather support other Countries instead. When is the last time you bought a GM product? 

Did you even read the GM press release?? The one in the link I provided?? Apparently not.

I don't consider buying a product to be supporting a country - supporting a company, maybe, but not a country so leave the union tactic of accusing buyers of lack of patriotism if they don't buy a Chev, Ford or Chrysler, many of which are made in Mexico, Asia and other non-NA locales. What the union really means with such statements, is that you should buy a UAW or CAW-made product.

BTW, a link or proof of your statements would still be appreciated, but since you have never seen fit to provide that, I guess we will just have to "take your word" for it. Unfortunately, your word is not trusted or believed here by most posters.