The Jeep brand could return to Renault ownership under a deal that would split Chrysler between Renault and General Motors.
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Reuters, citing people familiar with the talks, overnight reported that Chrysler’s private equity owner Cerberus Capital Management was discussing selling all or part of Chrysler’s operations to Renault and General Motors in one of a number of deals that could break up the automaker.
The sources told the news agency that Cerberus, Chrysler’s majority owner [Daimler retains a minority holding], is talking to GM about a deal under which the Detroit rival could buy some of Chrysler’s assets as an alternative to an outright purchase.
They also told Reuters that Renault has expressed interest in Chrysler and is discussing possibilities ranging from an alliance to an acquisition of Jeep, widely considered to be Chrysler’s most valuable brand.
A deal with Renault would return Jeep back to the automaker that sold it to Chrysler along with American Motors in 1987 – it had bought the US firm in 1979.
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By GlobalDataAccording to one Reuters source, GM is eyeing Chrysler assets such as the top-selling Journey/Grand Caravan/Town and Country minivan line, a market segment Chrysler pioneered almost 25 years ago [and from which GM has withdrawn recently], and the truck production factories in Mexico.
As reported earlier, Cerberus talks with GM have also included Chrysler buying GM’s remaining 49% share of GMAC or even GM swapping that GMAC stake for Chrysler’s vehicle operations.
Reuters said contacts between Cerberus and the three automakers remain wide-ranging and preliminary but have become more urgent by the recent sharp downturn in vehicle sales that has forced Chrysler, GM and Ford Motor to take further steps to cut costs and conserve cash.
None of the automakers or Cerberus would comment to the news agency.
Whether or not key Chrysler assets now have more value separately than together is also under consideration, people familiar with the discussions told Reuters.
Cerberus is considering selling its Mopar parts unit, spinning off its engineering operations as a separate company and selling Chrysler Financial, one source told the news agency. Other sources said Chrysler’s captive finance company could be merged with GMAC.
But recent volatility in financial markets and frozen credit markets have slowed the talks and made it far more difficult for Cerberus and potential bidders to agree on the value of Chrysler’s various units or the value of GMAC, according to the news agency’s sources.
Reuters has also reported that Cerberus is close to agreeing a deal to buy Daimler’s remaining stake in Chrysler because any deal Cerberus might make to sell or merge Chrysler with another automaker hinges on it first buying out Daimler’s interest.
There were also suggestions that nothing could come of the talks and Cerberus would revert to its original plan of running Chrysler on its own.
Since taking over, it has made a number of key new executive appointments, restructured design operations, begun to rationalise and prune the vast product line, agreed some offshore parts sourcing deals (such as seat frames from India) and, as just-auto reported this week, is in talks to have some vehicles made in India.
It has also recently agreed several model-sharing deals with Nissan for compact and mid-size cars and light trucks.
“Cerberus has significantly underestimated the difficulty of running an automotive business, whether a parts supplier, finance company or vehicle assembler,” an anonymous banker told Reuters.
Reuters noted that analysts were “unimpressed” with the prospect of a full merger between Chrysler and GM as reports of the talks appeared earlier this week. GM, struggling for the past three years to cut costs and shed capacity, had held merger talks with Chrysler before the company was sold to Cerberus.
“At this point, it is not obvious how (a merger) would possibly increase the liquidity of the companies, and that is what Chrysler and GM need to get through the downturn,” Standard & Poor’s analyst Robert Schulz told the news agency on Thursday.
Reuters also noted that former Renault chairman and CEO Louis Schweitzer said in a memoir published last year that he regretted selling AMC and Jeep when the French automaker pulled out of the US in the late 1980s. Renault bought American Motors, which owned Jeep, in 1979.
“It would have been clever to make full use of Jeep,” Schweitzer wrote. “If we had done so, we would have been in a good position today in the US.”
Renault recently launched its first SUV, a model made by Korea affiliate Renault-Samsung.
GM-Chrysler talks signal supplier shake-up
