Bloomberg reports that at least two serious bids have been made for DaimlerChrysler AG's Chrysler unit. One of the bids is from Canada's largest auto-parts supplier and the other is a joint bid by private equity giants Blackstone Group LP and Centerbridge Capital Partners LLC.
Nobody close to the deal is saying what the likely price will be, but $6 billion is a number that has been tossed around by analysts. That's a lot of money considering Chrysler lost $1.5 billion last year. Its market share is also in freefall, dropping to 12.9 percent.
The real story here seems to be that the nine-year-old merger between DaimlerBenz AG and Chrysler Corp has been an unmitigated failure. The Germans were unable to take a struggling Chrysler back to its former glory, in spite of the fact that in most regards Chrysler has been the most vigorous of the Big Three Detroit automakers. This failure is particularly galling in view of the concommittent rise of Toyota. None of the Detroit automakers has been able to avoid enormous losses and even most foreign automakers like Honda are really just treading water. Only Toyota has moved to significantly increase its marketshare while remaining profitable.
The global auto industry is definitely a growth business worldwide over the next few decades. None of the Detroit automakers looks particularly well leveraged to take advantage of the rise of a new consumer class around the world. American management has failed spectacularly to lead the way and our German friends likewise appear stumped. Canada's largest auto-parts supplier looks to be doubling down and maybe that's their only hope to keep their jobs, but if I were one of those private equity concerns I'd rather invest in the only auto company worldwide with proven leadership - Toyota.
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