“We’re pleased,” automotive analyst George Magliano told just-auto.com from New York on Monday afternoon. “This is a good thing which will clear the air and get the company back to basics.”
Magliano said Global Insight liked the price – $US7.4bn – and the fact that $5bn of that was going into the car-making side of the company.
He said the price was way better than investor Kirk Kerkorian’s $4.5bn offer or the amount likely to have come from the Magna bid and avoided what could have come to a bidding war.
On the labour issue, Magliano said he knew no more than had already been announced today but reckons that, at the end of the day, and despite any posturing, the union was likely to give Chrysler similar concessions to those already offered to GM and Ford.
“They cannot deny Chrysler what they have already offered the other guys and hopefully that will defuse this thing,” he said. “Chrysler has shown it needs concessions.”
On ‘plant footprint’ changes, Magliano said he saw little likelihood that the plans announced on Valentines Day, when Chrysler set out its latest cuts, would need much altering.
“If they continue to work on their product, their market share will stabilise and they’ll get through as already planned,” Magliano added.
“When Cerberus recently hired former Chrysler manager Wolfgang Bernhard as a consultant, it became clear that the company was very interested in taking over Chrysler,” said Michelle Krebs, senior editor of California-based analyst Edmunds’ AutoObserver.com website.
“Having a former insider on their team will help, but it’s likely to be a difficult road ahead as Cerberus tries to get its arms around an organisation with limited product appeal, thousands of nervous employees and challenging union relationships. That being said, it is in Cerberus’ best interest to make Chrysler successful – so they can expand it for their own benefit or to sell it off in the future for more than they paid for it.”
“Chrysler can really benefit from private ownership. Now its leaders can focus on the day-to-day business of running a car company without analysts looking over their shoulders scrutinising quarterly reports,” added Krebs. “One of the reasons the Japanese automakers, particularly Toyota and Honda, are so successful is that they focus on the long term. This is something American automakers have been unable to do because of the short term pressures of the stock market.”
“In April, Chrysler Group’s incentives reached an average of $US4,250 per vehicle – almost $2,000 higher than the industry average,” said Edmunds.com’s senior analyst Jesse Toprak. “Despite the intense marketing support, Chrysler’s retail sales have been steadily slipping. They desperately need to introduce vehicles that take hold the way the 300, PT Cruiser and Town and Country did in their days.”