King Carlos to Conquer Chrysler?

[tama z71]

King Carlos (and a ravenous media) may be at it again
A Tama Article
November 1, 2006

The following excerpt is from a BusinessWeek article that suggests a solution to Chrysler's recent woes...

So what's Daimler's German brain trust going to do? Right now the plan is to fix Chrysler. Chairman Dieter Zetsche did that job himself a few years ago when he ran the unit before taking over the top job on Jan. 1 and is confident he can do it again.

But on the earnings call last week, Chief Financial Officer Bodo Uebber did not rule out an eventual spin-off. German magazine Der Speigel reported that Daimler's supervisory board is mulling several exit scenarios.

If Daimler gets to that point, the company may have an eager suitor...

Chrysler is in a mess again, and there are calls for the messiah of flagging car companies to come to the rescue.

Guess who?

If its not Carlos Ghosn, it's not a turnaround controversy. Since the romance with GM is over, and Ford shut it down before it could even begin, Carlos would be forced to turn to the American car company with the least appealing satchel of assembly plants and bothersome union obligations, Chrysler.

This would not be the first time King Carlos has tried to extend his empire to North American shores. However, before any official announcement of interest can come from the man himself, automotive journalists (or tabloidists) are scouring for their latest Detroit-downfall lead, and this would seem the next logical step in the progression of frivolous accusations and doomsday theories.

Despite the media's rapid hunt for the next big lead, Ghosn does have the capability to turn around the flagging Chrysler company. However, for this to transpire successfully (successfully for Chrysler, that is), three very, very unlikely circumstances would need to transpire.

1 - Leave Nissan. Ghosn has bit off more than he can chew, running two car companies on opposite sides of the globe. We all know that he is a turnaround expert, and very likely the only reason Nissan and Renault retain any level of financial legitimacy today. However, he could not do with Chrysler what he did with those two, so long as they remain under his domain. Quite N-R, devote your work completely to Chrysler, and we will see a turnaround. Much as we hate him for the Tracinda fiasco, he can turn a sinking ship right side up.

2 - Get the company in line. Even though he may be the best recovery expert in the biz, it's going to take a whole mess of magic to turn around a company whose brands are losing focus, whose products are lagging in perceived and actual quality, and who has to work out of tumultuous relationship with Ron Gettelfinger. Ghosn has never dealt with the UAW before, and I'd be very impressed if he could get anything past those guys, short of bankruptcy.

3 - Do his work and leave. We know that Ghosn is a turnaround wizard, but his problem is maintenance. He cannot maintain a company, as evidenced by Nissan's sliding sales, so-so second generation of products (shift 2.0, or what the hell ever they are calling it now), and the blundering, eyes-closed move of taking U.S. headquarters to California, leaving half his engineering and leadership nucleus back in Tennessee. To successfully turn Chrysler right side up, stay on board for five years, run out a new generation of products, get the company back in the black, and get the hell out. Ghosn, as others such as DeLorenzo have stated before, is a one trick pony.

Now, those are the circumstances under which Ghosn could theoretically bring Chrysler back to respectability, and they will never, never happen. Here's why.

1 - He's got a bad poker face. When Ghosn flirted with GM, it became very clear that he was in the deal for more plant capacity. He shut down all talk of a technology partnership, similar to what GM had previously done with DCX and BMW in developing the two-stage hybrid powertrain. Rather, it became clear that Ghosn wanted only a complete partnership, which would inevitably lead to the ouster of Rick Wagoner, which we have to assume was Kerkorian's goal all along. Thankfully, Wagoner and company saw through the garbage, and determined that the proposed deal was in no way favorable to GM (something they well could have decided from day one). So no, he won't turn around another company when all he wants is their plant infrastructure.

2 - It's a losing deal. Ghosn has two companies on his hands that are not cutting it sales-wise, so it can hardly be beneficial to propose a merger with the company who just announced it was sitting on one million, one million, one million units of unreported excess inventory. Even Carlos doesn't want that kind of excessive output.

I don't think King Carlos can really look at anything of this nature as a savory deal, and I'm not very sure he could pull it off, even if he committed himself fully to Chrysler as I stated above. General Motors made it clear that they had no interest in a lopsided merger with a production-hungry conquerer. Ford did it, with even less tact, chalking any such activity up as preposterous before the media could fully saturate the thought, and more importantly, before Carlos could announce an official interest in the deal.

Chrysler is in a whole mess of trouble, and they've already got one partner to contend with. For a company who has seen more rebirths than Madonna, it is not unlikely that the now-profitable Mercedes arm should sell off the Chrysler portion of the company, returning Detroit back to it's traditional domestic Big 3. However, alone or with DCX, Chrysler will be better off with a methodical turnaround project done at a manageable pace, much like Wagoner is doing with General Motors. I don't believe Carlos Ghosn is the right variable to satisfy the Chrysler equation, but you can be damn sure that the media will gorge themselves on the thought, anyways.

[Variance]

Well, aside from a couple of factual errors (Nissan HQ moved from Cali to Tennessee and the unreported bank of vehicles was at it peak, 100,000 units [currently ~50,000, I believe]), I mostly agree with your sentiment that Ghosn need not get involved with Chrysler.

Besides, both Ghosn and Zetsche have recently stated they have no interest in partnerships with anyone. So really, the BusinessWeek article isn't that well in tune with the reality what avenues the DCX and/or the Chrysler Group may take, I think.

[carman21]

Here is my solution,

Nissan gets Chrysler's unused factories and use of the next LX Platform for the next Maxima and access to Chrysler's Minivan Platform.

Chrysler gets use of Nissan's midsize and compact platforms as well as Renault's Subcompact platforms.

So, Nissan benefits by making more money off its platforms, gets more factories, and gets a cheap RWD platform for the Maxima.

Chrysler benefits by making more money off its two biggest non-truck platforms, turning its underused factories into assets, and gaining access to excellent global platforms.

Again who knows?

[Intrepidation]

Here is my solution,

Nissan gets Chrysler's unused factories and use of the next LX Platform for the next Maxima and access to Chrysler's Minivan Platform.

Chrysler gets use of Nissan's midsize and compact platforms as well as Renault's Subcompact platforms.

So, Nissan benefits by making more money off its platforms, gets more factories, and gets a cheap RWD platform for the Maxima.

Chrysler benefits by making more money off its two biggest non-truck platforms, turning its underused factories into assets, and gaining access to excellent global platforms.

Again who knows?

211500[/snapback]

Actually that's not a bad idea, especially if Nissan's new Altima is as good as they say. It'd be nice if DCX got use of the V6 too. As for compact? Eh...the Caliber looks better than the Sentra IMO and since both cars are newish, there's no need for that. The only other thing is that Nissan could always use the previous gen G35 platform for the next Maxima.

[FAPTurbo]

I seriously doubt Nissan has any plans to make a RWD sedan for it's pedestrian brand. They do have RWD sedan's in other markets, but here they are Infiniti's.

[carman21]

What's the point of Chrysler Group again?

Oh yeah, Dodge's claim to fame is that they have trucks and Cars that are drenched in testosterone to overcompensate for Dodge's short-comings. Chrysler's just there cause you can't be called Chrysler group without the Chrysler brand. The only mentionable car is the 300 whom gets bitch-slapped by a Yaris for being so ugly. Jeep is now just a girly version of Hummer.

Again what's the point of Chrysler Group?

[Guest YellowJacket894]

King Carlos? More like Emperor Carlos. The guy's desire for more, more, more makes me think of Napoleon Bonaparte.

[MyerShift]

The point of Chrylser Group (or rather, Chrysler Corp.) is to take chances that no other automaker would because they're too chicken $h!.

[carman21]

Ha! You are funny,lol!