Freightliner:

Cerberus Takes Chrysler Off Daimler's Hands

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Private equity firm Cerberus is in the process of taking Chrysler Group out of the hands of the automaker formerly known as DaimlerChrysler AG (DCX). What will soon become Daimler AG will continue to own 19.9% of the new company – Chrysler Holdings LLC – with Cerberus owning the remainder. This is the end of the Jurgen Schrempp dream for Daimler-Benz to create a global auto colossus made up of Mercedes-Benz, Freightliner, Chrysler, Mitsubishi and Hyundai.
Daimler-Benz took over (no merger – ever) Chrysler Corporation in November 1998 for $36 billion. Nine years later, DCX agreed to sell 80% of what is now Chrysler Group to Cerberus Capital for $7.4 billion. Clearly Schrempp’s plan did not work.
Impact on Opinion of Chrysler –
In late March, a VehicleVoice survey indicated that the opinion of Chrysler Group had deteriorated drastically from a year earlier. Our respondents variously said: “Daimler bought ’em, raped ’em and threw them away,” “Why would I buy a car from a company that’s parent company is trying to sell it?” Perhaps the purchase by Cerberus will serve to offset some of this deterioration, but time will tell.

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Cerberus Has Auto Industry Heavyweights Involved
Cerberus is the mythological three-headed dog that guards the gates of hell. Cerberus Capital is an interesting firm in its own right. Secretive to a fault, at least three auto industry heavyweights are on its letterhead (if they had one): David Thursfield, former Vice Chairman of Ford and an aggressive cost cutter; Wolfgang Bernhard, former COO of Chrysler Group (with Zetsche) and then head of Volkswagen in Germany prior to his Cerberus gig; and Robert Rewey, former head of Sales at Ford. Rewey could sell anything any day of the week. While Cerberus says they will keep the present Chrysler Group management team in place, it is only a matter of time that “adjustments” begin being made.
Remember the character in Pretty Woman played by Richard Gere? He was a private equity magnate that wanted to buy a shipbuilder, break it up and sell the pieces for a profit. A private equity firm like Cerberus isn’t too much different and the jury is still out on how Cerberus will handle its investment in Chrysler Group.
Cerberus has an interesting portfolio – a large stake in Delphi, 51% of GMAC – General Motors’ financing arm, Tower Automotive, Guilford Mills, Albertson’s, Sav-On, and others. The fact that Cerberus now controls Chrysler Financial and over half of GMAC gives it substantial clout in the automotive financial services market.
So, now, Chrysler Holdings can stay below the radar as a privately held company. Unfettered of its requirements to be transparent financially the company will largely be able to restructure itself outside the glare of the media and Wall Street. What will emerge after three, five or seven years is unknown, but the story will be fascinating to watch as is unfolds.


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Sterling Bullet – AKA Dodge Ram 4500 and 5500

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We must have been asleep at the switch. Not paying as close attention to the medium truck market as we do to the light truck market, AutoPacific and VehicleVoice staffers were tipped to the Sterling Bullet by our colleague Bill Senefsky of Automotive West Group. Actually Sterling went public with the Bullet on March 6. Public introduction is in late Fall, 2007.
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Apparently Dodge dealers are a bit “miffed” by Sterling getting this hardcore work truck. The question has to be asked, however, what will be the future of the Sterling Bullet when Chrysler Group is spun away from DaimlerChrysler? Will there be a clause in the deal maintaining the product or will it be still-born?
The Sterling Bullet is a mild derivative of the heavy duty Dodge Ram. Part of DaimlerChrysler’s Freightliner universe, Sterling got its mitts on the 6.7L Cummins turbo diesel Ram and put its own front fenders lights and grille on the body in white. Their website shows two cabstyles – regular cab and quad cab – unlike Dodge, there is no Mega Cab. There is also no “pickup” version but several commercial versions – “Wrecker”, “Flatbed”, “Dump”, “Crane”, “Contractor”, “Box”, “Tow”, “Service”. The Bullet is available in 4×2 and 4×4 versions with either cabstyle.
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The press release for the Bullet is below the fold.


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