Blog: Dave LeggettChrysler for sale?

Dave Leggett | 14 February 2007

Why would you announce plans to fix something and at the same time invite offers to buy it? In the case of DC's Chrysler division, it could be about sending a message to the UAW or, more accurately, its members. If it's not playing politics, then the 'for sale' sign coupled to a restructuring plan tells prospective buyers that Chrysler isn't a hopeless case, that it can be turned to profit on a reasonable timescale. 

It's like a control scenario or base case that acts as a kind of bait. Can you - the CEO of another car company - add value on top of the incumbent's business plan? If your gut feel is yes, you might at least get a team of people who have recent experience in evaluating such things on to it. No harm in crawling over the books.

And tout suite, as they say at Renault HQ. 

But, is DC really serious about offloading? As a number of commentators have observed, it has brands with global recognition - well one, really - and there's an argument that if you want to take on Toyota, you'd be unwise to give that up. Jeep is more than just a brand name - it's a generic term like hoover is in the world of vaccum cleaners. You can't buy that. And would Mr Zetsche sanction the sale of Chrysler after all the hard work he put into it in the first part of this decade? He wouldn't be happy about it.

DC is well in profit and can easily absorb the Chrysler losses for the moment, especially if a slimmed down Chrysler is coming. Besides, the shareholders ought to be (relatively) happy after what they have endured and the Chrysler for sale speculation has been driving the share price up. No great pressure on Zetsche to sell Chrysler (though Chrysler has its hard core long-term detractors inside Mercedes), but in announcing all options are open, he's been rather cute.

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