RADICAL CHANGES FOR RADICAL TIMES – OR IS THERE MORE TO IT?

Implications: Chrysler LLC announced it was exiting leasing entirely in July and GMAC has discontinued leasing in their Canadian market. This in it self may be considered a risk management avoidance given the current market status, however I find it interesting that Chrysler LLC is owned by Cerberus and Cerberus owns 52% of GMAC as well. This is just another curve ball for an already troubled dealer network that now has to rely on regional banks and credit unions that have different approaches and most likely higher interest rates and more stringent qualification requirements.

Analysis:     Another interesting thought as you ponder those two points, there has been a lot of speculation of selling Chrysler or specific brands, contract manufacturing for other OEM’s looking to capture North American presence in a weak dollar strong Euro climate or purely sell the operations entirely. The real question may be is it already sold? Cerberus being a private equity firm purchased Chrysler and its stake in GMAC as a bundle or pool of investors could one or some of those investors be Tata or Renault? It certainly makes for good “water cooler” conversation and a certain level of concern for employees and suppliers as they scramble to cut cost and compete in a global marketplace. 
     Looking at General Motors and specifically Mr. Wagoner’s insistence that bankruptcy is not in their future with a $2.5 billion dollar plan of cost cutting measures and a potential loan from the UAW VEBA fund of $8 billion dollars. These actions combined with $21 billion in cash could potentially get them the $10 billion dollar bogey they have predicted they need at the present rate they are burning cash to see them through this economic crunch. On the other side of town Ford is sitting on $26 billion dollars of cash and quietly stating they can survive as well.
    Looking at the “Detroit Three” scenario’s Ford may very well may be in the best position despite recent press to survive the cash pinch and GM partnering with their labor work force could also prove positive in the end giving the labor force a financial stake in the survival of the company. Chrysler LLC on the other hand is harder to read given the limited available information to speculate.