The Chrysler assets sale to Fiat Group SpA was consummated today. The deal saves Chrysler from liquidation in bankruptcy and turned Chrysler management over to Fiat CEO Sergio Marchionne....who was immediately named the new CEO. The Italian automaker did not put any money into the deal but will give Chrysler small car and engine technology.
The deal clears the way for a new Chrysler Group LLC to emerge from bankruptcy. The bankruptcy cleared away billions in debt, thousands of employees, 789 dealerships and high labor costs. The United Automobile Union gets stock in the new Chrysler but did not have to give up much in terms of wage concessions.
Apparently, the Indiana pension appeals were not enough to get the Supreme Court involved in the legalities of the issue. The debate centered around the fact that secured bond holders were put in an unsecured position receiving a small percentage of what they thought they should receive.
Some of the factories that had been closed will be reopened shortly! Others will remain closed and liquidated thru the bankruptcy.
The new Chrysler will will focus on small vehicles. "Work is already under way on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler's hallmark going forward," a press release from the company indicated.
Jim Press, will take the position of Vice Chairman and President. Press was formerly Toyota's top U.S. executive but was enticed to join Chrysler in 2007 when Cerberus Capital Management purchased Chrysler.
SUMMARY:
My take on this deal is that it stinks! The Obama administration basically ignored the rule of law where secured creditors are secured by assets....the Chrysler bond holders were robbed and had no recourse. First the liabilities were stripped, which are owned by U.S. companies and citizens, then the assets are given to a foreign corporation Fiat with government financing. This is the sweetheart deal of the century. Fiat did not have to pay $.01 US cent!
Fiat does not have the cash or credit lines to acquire any other large company. If the economy turns worse than expected Chrysler could be in this sad state again! Fiat would be able to walk without much difficulty.
I was very unhappy about the way that they treated the 789 dealers that were closed. It is grossly unfair to the dealers, employees and customers.
Shown above is a concept electric car the Chrysler 200 CC!
Peter, this is not a good deal. So many people lost out on this deal. People are going to remember all of this. That might keep them from buying the cars that they bring out. So many things are happening with the car companies that you will have a lot to write about. Did you hear GM (in bankruptcy) bailed out another company a few weeks ago, Delphi (not sure on the spelling of the name.) How can they do that? Why is it not being talked about much? All of this stuff stinks !!! The government is to much involved. They have no business in this at all. Can you find out more about the GM thing with Delphi?
ReplyDeleteDan and Deanna "Marketing Unscrambled"
Hi Dan & Deanna,
ReplyDeleteI am definitely unhappy with the Chrysler deal! If they do that to bond holders, dealers, and employees...don't you think they would do something like that to the customers. So, I am not interested in their business tactics.
Delphi was actually owned by GM a few years back and was spun off as an independent company. But, they have been in bankrupcy for a while!
The reason that GM purchased Delphi is that they supply parts for GM cars....if Delphi had been liquidated GM would have to scramble for the replacement parts. That might substantially interfer with GM's production....so it probably was a good thing that they bought Delphi.
Thanks for the great comment!
Pete Baca
The Car Enthusiast Online
Peter, Delphi for the parts sounds like a good thing, but with GM in bankrupcy themselves how can they do it at all. With taxpayer money no doubt. This whole thing is getting worse all the time, with the government in the middle of it saying do things this way or that way. A lot of people have been hurt with all of this mess. people are not going to forget it that quickly. Will they stay away from buying the cars because of all this stuff. Some will.
ReplyDeleteDan and Deanna "Marketing Unscrambled"
Hi Dan & Deanna,
ReplyDeleteI agree with you regarding the government! They have really gone overboard with their involvement with companies....at taxpayer expense.
I agree with them that we needed to save the U.S. auto manufacturing base....since that is what saved us during WWII. I do have disagreements with this deal as I outlined in the post.
Yes, I think people will remember what has gone on with Chrysler. People want to feel good about the cars they buy and the company that sells that to them. So, there are some people that will not buy a car from Chrysler anymore.
But, isn't that what really got them here in the first place. If people would have been happy with Chrysler cars then their sales would be up versus down.
Thanks for your great comment!
Pete Baca
The Car Enthusiast Online
Pete,
ReplyDeleteWhat's new? I agree with you! This was a very unfair deal. Thanks for keeping me up todate.
Sincerely,
Dr. Bob Moulas
Dr. Bob,
ReplyDeleteI don't normally get into politics in my blog but it just irritated me! I sit back and look at what the government issues that created the whole financial nightmare that we are experiencing.
I hope for the dealers and employees that Chrysler survives and prospers. But, they have built up some ill will with people how this was handled.
Thanks for your comment!
Pete Baca
The Car Enthusiast Online
Peter, they really have made some people not very happy with them. That will carry over into the sales side of things. You are so right about the government part of this mess. They are not helping to get out of it, just making it worse.
ReplyDeleteDan and Deanna "Marketing Unscrambled"
Hi Dan & Deanna,
ReplyDeleteChrysler has mishandled the bankrupcy situation...they should have handled the dealers differently. The customers and employees at the dealers impacted will not forget this! GM gave their dealers over a year to get the winddown done.
Chrysler also mismanaged the public affairs side of the bankrupcy. GM had advertising, promotions and a website to deal with customer concerns.
I don't know what hand the government had in some of these actions...but they were involved.
Thanks for your comment!
Pete Baca
The Car Enthusiast Online