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Saturday, February 17, 2007

Why Buy Chrysler?

Speculation is rampant about who may buy the Chrysler group from DCX. The Detroit News reports one rumor that GM is considering buying out Chrysler.

I'm not seeing it.

Where is GM strong? SUVs (Hummer, GMC, etc), crossovers, trucks, high end luxury cars, large family cars, sports cars (Corvette, coming Camaro) and economy cars (Aveo, Cobalt). Where is Chrysler strong? SUVs (Jeep), minivans, trucks (Ram), large family cars (300 family), sports cars (Viper, upcoming Challenger?), economy cars (Caliber family).

Both companies are weak on near-luxury (Buick) and moderately priced mid-sized cars.

Where would the "synergy" be, to use the management buzzword of the decade? GM needs viable mid-sized cars, not more trucks. The only Chrysler properties that would make sense for GM to buy would be Jeep, because of the obvious Hummer/Jeep tie-in and a corner on the hard-core off-road market, and maybe the minivan lines.

In addition, Chrysler brings bloated inventories, cranky UAW locals, debt, too many dealers, pension and healthcare obligations--in other words, more of the same problems GM already has.

If Chrysler is spun off from DCX, I would expect that it would be bought by an overseas company which wants a larger presence in SUVs and trucks (Hyundai), or a private investment group.

3 comments:

sh said...

You're probably right about the Buick not being an effective near luxury car, however there is the CTS.
I have to disagree on "no moderately-priced mid sizes". There's the Aura, the G6, G8 soon, and the Impala is getting a respectable overhaul.

Pat Patterson said...

The Charger, sedan and station wagon, as well as the 300 are selling well. they might have some value as I can't think of comparable GM models that sell as well.

lauren said...

I agree with you. The idea has to be a joke. What would GM has to gain from the Chrysler group? Although chrysler makes nice trucks with great performance parts starting from the engine to chrysler struts and the rest, what GM lacks are the luxurious vehicles.