Chrysler Sale: What it Means to Consumers

The big news today is the official announcement that DaimlerChrysler will sell the Chrysler Group to private equity firm Cerberus Capital Management for $7.4 billion before the end of the year. This is the first time a private equity firm has bought an automaker and employee concerns naturally stem from the slash-and-burn tactics often employed by such firms.

Cerberus already owns a majority stake in General Motor’s financial company GMAC — for which it coincidentally also paid $7.4 billion last year — and the most logical step of the Chrysler purchase would be to merge Chrysler Financial and GMAC to help reduce costs. For car owners, that could mean a change to the logo on their statements, but unless Cerberus decides to sell one of the three Chrysler Group brands — Chrysler, Dodge or Jeep — there shouldn’t be a significant change for consumers, at least right away.

However, the speculation is that the private equity firm’s penchant for cost-cutting will affect the dealer network of all three Chrysler brands, and it may well mean that the firm will seek concessions from its unions.

We wonder how future vehicle development will progress, since so many recent Chrysler products were partly developed in conjunction with Daimler’s Mercedes-Benz.

Cerberus — named after the mythological three-headed hound of Hades — employs former Vice President Dan Quayle, and its chairman is John Snow, a former U.S. Treasury Secretary under George W. Bush. Snow said that the company wants to make Chrysler a success. “Together I think we will take Chrysler to the next stage of its path to profitability and growth and restore it to the first ranks of the U.S. and the global auto industry.” 

How Chrysler achieves that success remains the big question.

Daimler Confirms Chrysler Sale to Cerberus; UAW On Board (The Detroit News)