Chrysler will likely be in the hands of a new parent company soon, the only real questions are when and to whom? We already know why: Chrysler is a somewhat small car company with $11 billion in cash reserves, and a parent company (Cerberus Capital Management) who’s entire strategy for Chrysler was to sell it in the end. "I can tell you that we have approached and have been approached by third parties who are interested in exploring future possibilities with Chrysler," Chrysler CEO Bob Nardelli said in a memo to employees.
Last week, the surprise story was that General Motors and Chrysler had entered merger talks, but GM is not the only suitor. Other potential buyers have included the Renault-Nissan Alliance, Fiat or Tata. So let’s take a look at what each one could possibly mean...
GM-Chrysler would likely be the most lost jobs. The product lines of the two from Detroit are almost the same, and GM is more likely to eliminate some of its eight U.S. brands in the upcoming years rather than add to them. The General Motors merger would likely be for the cash reserves and to take advantage of economies of scale.
Chrysler and the Renault-Nissan Alliance would fulfill Chrysler’s ex-CEO Lee Iacocca’s prophecy of a company called "Global Motors". He believed that the smallest of Detroit’s Big Three (Chrysler) should merge with a European and Japanese company to leverage strengths in style, production and scale. Chrysler and Nissan are already in a trade-off deal for Chrysler to give Nissan full-size trucks and Nissan to give Chrysler a small car. Renault and Nissan ’s shared CEO Carlos Ghosn is the best person to bridge the cultural gap between the companies while trying to turn Chrysler around. Ghosn is considered to be a turnaround expert after saving Nissan from going under in the late 90s.
Chrysler, Fiat and Tata have all been rumored together , but exact intentions are a little more vague. Chrysler has been rumored to possibly be selling cars or car brands to Tata as well as rent manufacturing and showroom space to the Fiat group. Fiat is also Tata’s financing arm in Europe and the Italian company may also sell versions of Tata ’s Nano to emerging markets. One of these companies may find it more advantageous to own one or both of the other companies in this supply triangle.
So, what’s best for Chrysler? Who wants the pentastar brand the most? Time will tell, and when we know more, we’ll tell you.