Nissan, Chrysler cancel deal | The Detroit News

Nissan Motor Co. and Chrysler Group LLC have dropped their plans to produce vehicles for each other.

The two automakers agreed early last year to pool their volumes in the full-size pickup and subcompact segments, but doubts about the projects arose after Chrysler teamed up with Italy's Fiat SpA.

"For the past several months, teams from both companies have been studying the viability of the projects in light of significant changes in business conditions since the projects were announced," the two automakers said in a joint statement.

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"Today, it was decided it was in the best interests of both companies to end the projects."

Last year, before Chrysler joined forces with Fiat, it agreed to produce a full-size pickup for Nissan, while the Japanese automaker agreed to make two subcompacts for Chrysler.

But Fiat, a small car specialist, will provide Chrysler with small-car underpinnings and sell at least one of its own cars, the 500, in the United States.

Nissan, Chrysler cancel deal | detnews.com | The Detroit News

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Chrysler And Fiat Merger

From Forbes Jerry Flint

The announced deal between Chrysler and Fiat has benefits for both, but it is not a game changer--not yet.

The alignment between Fiat of Italy and Chrysler does not exactly save Chrysler, but it gives Fiat an entry into the U.S. In short, Fiat is to get 35% of Chrysler, will not pay any cash for the stake, and it will give Chrysler access to its technology.

Fiat (nyse: FIA - news - people ) had publicly said it wanted a production base in North America for its Alfa Romeo brand--and presumably the Fiat brand, too. Through its 35% interest that it is getting in Chrysler, it would presumably have access to a U.S. plant to build its cars.

The chief executive of Fiat, Sergio Marchionne, has also worried that his company was not big enough to survive in today's world. Marchionne was born in Italy in 1952 but built his early career in Canada and has dual Canadian and Italian citizenship. Chrysler has some Canadian plants, and the Canadian autoworkers union, separated from the American UAW, has been quite cooperative in working with the industry in recent years.

So at no cash cost, Fiat may have its production base on this continent. What about Chrysler? The company has been weak technically and does not have enough money to finance the kind of new vehicle programs that Chrysler needs to stay competitive in this market.

Fiat is strong in small cars and in their engines and transmissions, as well as in luxury cars and diesel engines. Getting the technology could be a huge help for Chrysler, but the American company will still need the money and ability to create new cars even with Fiat technology.

The alliance might help Chrysler if it needs to get more money from the American government in its battle to survive.

Chrysler's strength has been in sport utility vehicles, pickup trucks and minivans. We do not know Fiat's degree of interest in these businesses. Meanwhile, another foreign maker, Nissan (nasdaq: NSANY - news - people ) (which is part of the Renault/Nissan alliance) has an agreement with Chrysler whereby Nissan is to get a version of the Dodge Ram, a big pickup, and Nissan is to build small cars destined for Chrysler....More

A Great Automotive Rebuttal- Gm, Chrysler, Ford, Hyundai,Nissan

The Big Three should get the money they need to consolidate and change the direction of the auto industry. The major players will have to work together to survive and build alternative power standardization. Everyone has been screaming they want alternative energy and want to stop the dependency on foreign oil!..Well, If you want electric and hydrogen powered cars,you'll have to pay for the infrastructure overhaul!

Here is a great rebuttal to the Financial Times article (Why Detroit is not Wall Street)The article says The Big 3 Will Fail and Should not be bailed out!


From Mr Stephen J. Collins.

Sir, Your editorial “Why Detroit is not Wall Street” (October 31) takes a disappointingly narrow and harsh view of the unprecedented shocks confronting Chrysler, Ford and General Motors. It also vastly underestimates the importance of the car industry to the US economy.

As the current global economic crisis stabilises, these companies do have the ability to recover and continue their vital role in the future of US manufacturing. The alternative would be a tragedy that would have a devastating impact on the US economy and further diminish the US's competitive standing.

The three American car companies generate 5m American jobs and employ seven out of 10 American car workers. No other American industry generates more employment, annual economic output, exports and retail business.

Your editorial maintains that “bailing out one or more of the carmakers would only delay the inevitable”. But what is being proposed is a partnership between the Detroit carmakers with the US government for advanced automotive research and development and alternative fuel technologies in order to meet our national energy goals. Partnerships like this are what governments around the world have been doing for years to support their national car industries.

The transformation of the US car industry to a new and different energy future is well under way, but the financial crisis and dramatic economic slowdown are presenting huge challenges.

The solution lies in working together – government, management and labour – towards solutions that will get our economy and our industry through this crisis and retain US leadership in the global automotive industry.

Stephen J. Collins,
President,
Automotive Trade Policy Council,
Washington, DC, US
On behalf of Chrysler LLC, Ford Motor Company and General Motors Corporation


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A Great Automotive Rebuttal- Gm, Chrysler, Ford, Hyundai,Nissan

The Big Three should get the money they need to consolidate and change the direction of the auto industry. The major players will have to work together to survive and build alternative power standardization. Everyone has been screaming they want alternative energy and want to stop the dependency on foreign oil!..Well, If you want electric and hydrogen powered cars,you'll have to pay for the infrastructure overhaul!

Here is a great rebuttal to the Financial Times article (Why Detroit is not Wall Street)The article says The Big 3 Will Fail and Should not be bailed out!


From Mr Stephen J. Collins.

Sir, Your editorial “Why Detroit is not Wall Street” (October 31) takes a disappointingly narrow and harsh view of the unprecedented shocks confronting Chrysler, Ford and General Motors. It also vastly underestimates the importance of the car industry to the US economy.

As the current global economic crisis stabilises, these companies do have the ability to recover and continue their vital role in the future of US manufacturing. The alternative would be a tragedy that would have a devastating impact on the US economy and further diminish the US's competitive standing.

The three American car companies generate 5m American jobs and employ seven out of 10 American car workers. No other American industry generates more employment, annual economic output, exports and retail business.

Your editorial maintains that “bailing out one or more of the carmakers would only delay the inevitable”. But what is being proposed is a partnership between the Detroit carmakers with the US government for advanced automotive research and development and alternative fuel technologies in order to meet our national energy goals. Partnerships like this are what governments around the world have been doing for years to support their national car industries.

The transformation of the US car industry to a new and different energy future is well under way, but the financial crisis and dramatic economic slowdown are presenting huge challenges.

The solution lies in working together – government, management and labour – towards solutions that will get our economy and our industry through this crisis and retain US leadership in the global automotive industry.

Stephen J. Collins,
President,
Automotive Trade Policy Council,
Washington, DC, US
On behalf of Chrysler LLC, Ford Motor Company and General Motors Corporation


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GM-Chrysler Move Frees Ghosn to Focus on Renault, Nissan Woes

By Laurence Frost and Naoko Fujimura
Nov. 7 (Bloomberg) -- Carlos Ghosn should focus on managing Renault SA and Nissan Motor Co. through the worst auto-market slump in years as merger talks between General Motors Corp. and Chrysler LLC hamper his quest for a U.S. partner, investors say.

``Ghosn needs to concentrate on his companies now, because they're both suffering,'' said Koichi Ogawa, who helps manage $28 billion at Tokyo-based Daiwa SB Investments Ltd. Nissan and France's Renault should tighten the screws at home rather than invest abroad as the credit crisis ``pushes the global economy toward recession,'' he said.

GM, considered a potential partner by Ghosn even after the biggest U.S. automaker rebuffed his last approach in 2006, has held talks over a possible government-funded combination with Chrysler, which had been increasing cooperation with Nissan. The Tokyo-based company and Renault, both led by the 54-year-old chief executive officer, aren't likely to offer a better alternative.

Nissan slashed its full-year profit forecast by more than half on Oct. 31 after global auto markets plummeted. Renault had already cut its guidance, in part because Nissan won't contribute as much to profit as the automakers expected. The pair's struggles, reflected in industry-leading stock declines, may thwart Ghosn's U.S. ambitions.....more

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GM-Chrysler Move Frees Ghosn to Focus on Renault, Nissan Woes

By Laurence Frost and Naoko Fujimura
Nov. 7 (Bloomberg) -- Carlos Ghosn should focus on managing Renault SA and Nissan Motor Co. through the worst auto-market slump in years as merger talks between General Motors Corp. and Chrysler LLC hamper his quest for a U.S. partner, investors say.

``Ghosn needs to concentrate on his companies now, because they're both suffering,'' said Koichi Ogawa, who helps manage $28 billion at Tokyo-based Daiwa SB Investments Ltd. Nissan and France's Renault should tighten the screws at home rather than invest abroad as the credit crisis ``pushes the global economy toward recession,'' he said.

GM, considered a potential partner by Ghosn even after the biggest U.S. automaker rebuffed his last approach in 2006, has held talks over a possible government-funded combination with Chrysler, which had been increasing cooperation with Nissan. The Tokyo-based company and Renault, both led by the 54-year-old chief executive officer, aren't likely to offer a better alternative.

Nissan slashed its full-year profit forecast by more than half on Oct. 31 after global auto markets plummeted. Renault had already cut its guidance, in part because Nissan won't contribute as much to profit as the automakers expected. The pair's struggles, reflected in industry-leading stock declines, may thwart Ghosn's U.S. ambitions.....more

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Detroit Media Reports:Chrysler In Talks With Nissan

Local Detroit media outlets are reporting that Chrysler is in talks with Nissan Motors. Cerberus-Chrysler has already agreed on joint partnerships to produce small and mid-size vehicles. Nissan wants in the American truck market and Dodge has the Newest truck on the market.Stay tuned to this one, Nissan Might be the fit!

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Detroit Media Reports:Chrysler In Talks With Nissan

Local Detroit media outlets are reporting that Chrysler is in talks with Nissan Motors. Cerberus-Chrysler has already agreed on joint partnerships to produce small and mid-size vehicles. Nissan wants in the American truck market and Dodge has the Newest truck on the market.Stay tuned to this one, Nissan Might be the fit!

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GM needs cash before it could buy Chrysler! Cerberus-Chrysler could really buy GM!

Companies declined to confirm merger talks. Analysts say GM would need a lot of cash before a deal could materialize.

DETROIT (AP) -- For General Motors Corp. to acquire Chrysler LLC and all of its warts, GM would have to get desperately needed cash. Lots of it, according to industry analysts.

With both automakers struggling to survive amid slumping sales, a slowing global economy and an unprecedented credit crunch, it's unclear whether Chrysler's majority owner, Cerberus Capital Management LP, would be willing to pay up, or whether the federal government might even get involved to save one or both struggling automakers.

"There's got to be more in it for GM than just Chrysler," said Erich Merkle, an auto industry analyst with Crowe Horwath LLP, an accounting and consulting firm. "If you put two auto companies together, both that are losing money, both that are losing market share, you've just got an auto company that's losing market share faster and losing more money."

GM and Cerberus, which owns 80.1% of Chrysler, have held preliminary talks about an acquisition or other combination of the two automakers, according to a person familiar with the discussions who did not want to be identified because the talks have not been made public.

A tie-up between the automotive giants would be historic for the industry and solidify GM's position as the global sales leader, which it has been in danger of losing to Toyota Motor Corp.

GM and Toyota finished 2007 essentially even in vehicles sold worldwide. GM and Chrysler already have a joint venture with BMW AG making a hybrid gas-electric powertrain.

While melding the companies could save money by combining management, engineering, manufacturing and administrative staffs, analysts say consolidation would bring more costs, and the rewards probably wouldn't come for several years.

That might be too late for both automakers. Auburn Hills-based Chrysler, a privately held company, doesn't have to open its books, but it lost at least $510 million in the first quarter and $1.6 billion last year. Its sales are down 25% so far this year, the worst drop of any major automaker.

Detroit-based GM is burning up more than $1 billion in cash per month, with several analysts predicting it will reach its minimum operating cash level of $14 billion sometime next year.

Sales are down 18%, and the company has lost $57.5 billion in the past 18 months, largely because of tax accounting changes.

Bad timing? All of this comes as U.S. sales have slowed to their lowest point in 15 years, making bankruptcy possible for all of the cash-strapped Detroit Three if things don't turn around soon enough.

Not exactly the prime scenario for a GM-Chrysler combination, said analyst Kevin Tynan of New York-based Argus Research Corp.

"Even though you're getting the rationalization of folding the two businesses together, it doesn't make sense at this time," he said. "There's got to be some sort of outside motivation for them to do that sort of deal, especially in this market."

That outside motive, analysts speculated, could be the federal government, which would inherit massive pension liabilities if either company went under.

In exchange for taking on Chrysler, analysts envisioned that GM could be given access to low-rate emergency borrowing from the Federal Reserve's discount window, used in normal times by banks.

GM, though, said it is not going to the Fed at present. "We're not actively pursuing anything at this time," said Greg Martin, GM's Washington spokesman.

What's in it for Cerberus? The Wall Street Journal reported late Friday that Cerberus might trade Chrysler for GM's 49% stake in GMAC Financial Services. Cerberus bought 51% of GM's former financial arm for $14 billion in 2006, but since then GMAC has suffered because of bad mortgage loans.

GMAC could look good to Cerberus now, Merkle said, because its insurance and auto businesses are profitable, and the federal government may take on its bad mortgages through the $700 billion financial bailout plan approved earlier this month.

If a merger were to go through, GM could move quickly to cut costs and save billions, said Van Conway, a mergers and acquisitions expert and partner with Birmingham, Mich.-based Conway & MacKenzie.

The company would have to calculate whether it has enough cash to stay alive and fund the deal, he said. If the numbers work, a lean, merged automaker would be in a strong position to make money once the U.S. market recovers and people start buying vehicles again, Conway said.

"You want to be the last man standing here because the car market is going to come back," he said.

Tynan estimated GM could save more than $5 billion a year by running the two companies as one, but said it could take years to realize the savings.

"Over the short term there's very little in the way of consolidation that could occur," said Michael Robinet, vice president of global forecast services for CSM Worldwide, an auto industry consulting company based in Northville, Mich.

Renault and Nissan are still completing their consolidation, even though the companies joined in 1999, he said.

A combined GM-Chrysler would have too much factory capacity, too many brands and too many dealers, the analysts said. "Adding three more brands (Chrysler, Dodge and Jeep) to their mix and another company that's very heavy in the area of truck production and sales, I don't know how that can be a good thing," Merkle said.

Neither GM nor Chrysler would confirm that they've talked, but each said discussions between automakers are routine.

There also were reports Saturday that Chrysler was in talks with Nissan-Renault, and The New York Times reported that GM had approached Ford Motor Co. about a merger earlier in the year, but Ford wanted to stay independent.

Merger talk among the Detroit Three is not new. GM talked with DaimlerChrysler AG in 2007 about acquiring Chrysler before Cerberus bought its stake in a $7.4 billion deal. The talks fell through when GM decided it should concentrate on cost savings and efficiencies by globalizing its own operations.

Cerberus and Daimler confirmed last month that they are in talks for the private equity firm to acquire Daimler's remaining 19.9% Chrysler stake.

The Journal said the talks between GM and Chrysler are on hold for now due to recent turmoil in the financial markets.

The auto industry has been hit hard in recent weeks by the effects of the credit crisis, prompting GM and Ford to issue statements Friday to dispel the notion that they might be headed for bankruptcy.

GM and Ford shares were battered with the rest of the stock market this week, falling to lows not seen in decades. GM (GM, Fortune 500) shares lost about half of their already-depressed value during the week, closing at $4.89 on Friday. Ford (F, Fortune 500) shares fell similarly, ending the week at $1.99.

GM said Friday, in response to the stock price, that it is nor considering a bankruptcy filing.

"Clearly we face unprecedented challenges related to uncertainties in the financial markets globally and weakening economic fundamentals in many key markets, but bankruptcy protection is not an option GM is considering," a company statement said.

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GM needs cash before it could buy Chrysler! Cerberus-Chrysler could really buy GM!

Companies declined to confirm merger talks. Analysts say GM would need a lot of cash before a deal could materialize.

DETROIT (AP) -- For General Motors Corp. to acquire Chrysler LLC and all of its warts, GM would have to get desperately needed cash. Lots of it, according to industry analysts.

With both automakers struggling to survive amid slumping sales, a slowing global economy and an unprecedented credit crunch, it's unclear whether Chrysler's majority owner, Cerberus Capital Management LP, would be willing to pay up, or whether the federal government might even get involved to save one or both struggling automakers.

"There's got to be more in it for GM than just Chrysler," said Erich Merkle, an auto industry analyst with Crowe Horwath LLP, an accounting and consulting firm. "If you put two auto companies together, both that are losing money, both that are losing market share, you've just got an auto company that's losing market share faster and losing more money."

GM and Cerberus, which owns 80.1% of Chrysler, have held preliminary talks about an acquisition or other combination of the two automakers, according to a person familiar with the discussions who did not want to be identified because the talks have not been made public.

A tie-up between the automotive giants would be historic for the industry and solidify GM's position as the global sales leader, which it has been in danger of losing to Toyota Motor Corp.

GM and Toyota finished 2007 essentially even in vehicles sold worldwide. GM and Chrysler already have a joint venture with BMW AG making a hybrid gas-electric powertrain.

While melding the companies could save money by combining management, engineering, manufacturing and administrative staffs, analysts say consolidation would bring more costs, and the rewards probably wouldn't come for several years.

That might be too late for both automakers. Auburn Hills-based Chrysler, a privately held company, doesn't have to open its books, but it lost at least $510 million in the first quarter and $1.6 billion last year. Its sales are down 25% so far this year, the worst drop of any major automaker.

Detroit-based GM is burning up more than $1 billion in cash per month, with several analysts predicting it will reach its minimum operating cash level of $14 billion sometime next year.

Sales are down 18%, and the company has lost $57.5 billion in the past 18 months, largely because of tax accounting changes.

Bad timing? All of this comes as U.S. sales have slowed to their lowest point in 15 years, making bankruptcy possible for all of the cash-strapped Detroit Three if things don't turn around soon enough.

Not exactly the prime scenario for a GM-Chrysler combination, said analyst Kevin Tynan of New York-based Argus Research Corp.

"Even though you're getting the rationalization of folding the two businesses together, it doesn't make sense at this time," he said. "There's got to be some sort of outside motivation for them to do that sort of deal, especially in this market."

That outside motive, analysts speculated, could be the federal government, which would inherit massive pension liabilities if either company went under.

In exchange for taking on Chrysler, analysts envisioned that GM could be given access to low-rate emergency borrowing from the Federal Reserve's discount window, used in normal times by banks.

GM, though, said it is not going to the Fed at present. "We're not actively pursuing anything at this time," said Greg Martin, GM's Washington spokesman.

What's in it for Cerberus? The Wall Street Journal reported late Friday that Cerberus might trade Chrysler for GM's 49% stake in GMAC Financial Services. Cerberus bought 51% of GM's former financial arm for $14 billion in 2006, but since then GMAC has suffered because of bad mortgage loans.

GMAC could look good to Cerberus now, Merkle said, because its insurance and auto businesses are profitable, and the federal government may take on its bad mortgages through the $700 billion financial bailout plan approved earlier this month.

If a merger were to go through, GM could move quickly to cut costs and save billions, said Van Conway, a mergers and acquisitions expert and partner with Birmingham, Mich.-based Conway & MacKenzie.

The company would have to calculate whether it has enough cash to stay alive and fund the deal, he said. If the numbers work, a lean, merged automaker would be in a strong position to make money once the U.S. market recovers and people start buying vehicles again, Conway said.

"You want to be the last man standing here because the car market is going to come back," he said.

Tynan estimated GM could save more than $5 billion a year by running the two companies as one, but said it could take years to realize the savings.

"Over the short term there's very little in the way of consolidation that could occur," said Michael Robinet, vice president of global forecast services for CSM Worldwide, an auto industry consulting company based in Northville, Mich.

Renault and Nissan are still completing their consolidation, even though the companies joined in 1999, he said.

A combined GM-Chrysler would have too much factory capacity, too many brands and too many dealers, the analysts said. "Adding three more brands (Chrysler, Dodge and Jeep) to their mix and another company that's very heavy in the area of truck production and sales, I don't know how that can be a good thing," Merkle said.

Neither GM nor Chrysler would confirm that they've talked, but each said discussions between automakers are routine.

There also were reports Saturday that Chrysler was in talks with Nissan-Renault, and The New York Times reported that GM had approached Ford Motor Co. about a merger earlier in the year, but Ford wanted to stay independent.

Merger talk among the Detroit Three is not new. GM talked with DaimlerChrysler AG in 2007 about acquiring Chrysler before Cerberus bought its stake in a $7.4 billion deal. The talks fell through when GM decided it should concentrate on cost savings and efficiencies by globalizing its own operations.

Cerberus and Daimler confirmed last month that they are in talks for the private equity firm to acquire Daimler's remaining 19.9% Chrysler stake.

The Journal said the talks between GM and Chrysler are on hold for now due to recent turmoil in the financial markets.

The auto industry has been hit hard in recent weeks by the effects of the credit crisis, prompting GM and Ford to issue statements Friday to dispel the notion that they might be headed for bankruptcy.

GM and Ford shares were battered with the rest of the stock market this week, falling to lows not seen in decades. GM (GM, Fortune 500) shares lost about half of their already-depressed value during the week, closing at $4.89 on Friday. Ford (F, Fortune 500) shares fell similarly, ending the week at $1.99.

GM said Friday, in response to the stock price, that it is nor considering a bankruptcy filing.

"Clearly we face unprecedented challenges related to uncertainties in the financial markets globally and weakening economic fundamentals in many key markets, but bankruptcy protection is not an option GM is considering," a company statement said.

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