MOTOR-BLOG from Coventry

Well it was all over the office today like a rash - is the once mighty Chrysler Corporation about to go bust? Apparently they are virtually bankrupt - and this comes only a few months after Mercedes Benz/Daimler sold the ailing American manufacturer to private equity group Cerberus Capital Management.

Cerebus is now facing serious subprime mortgage related losses from another arm of its portfolio - GMAC Financial Services - which it bought from General Motors for $12 billion. In turn, these losses could jepodise the future of the whole management group including Chrysler - and lets face it, with their vast debts who else would want to buy them as a going concern? 

Cerberus bought Chrysler from Daimler last August in a deal where the German Car manufacturer esentially paid Cerberus to take Chrysler off its hands, spelling the breakup of the Daimler-Chrysler group. In 2006, Chrysler fell to number 4 in the U.S. sales charts behind Toyota Motor Company.

Now that Chrysler is in real trouble, the deal looks like it was an inspired move for Daimler who passed on the $1.5 billion loss that Chrysler made in 2007. Daimler also no longer has continued obligations to Chrysler union members and retirees pensions - Cerberus has taken over that burden.

While the US press may be down on the proposed take over of Jaguar  /  Land Rover from Ford - claiming that Indian owners would dent the the marques prestige (I call that American rascism in action, but we’ll let that one pass for now), I say that the proposed Tata deal could prove to be Jaguars’ salvation.

Also the LR-Jaguar deal will include the rights to the Rover name, which Ford bought off BMW to protect Land Rover. Rumour has it that Tata would be interested in re-introducing the Rover moniker and as they are about to release a new car costing around £2500, I have to ask - could we eventually see a new Indian built Rover Metro return? I for one hope so…

Tata, unlike the big three (perhaps soon to be big two if Chrysler folds!) is cash rich, ambitious and growing year on year. Whilst the demise of Chrysler would be catastrophic for US industry, at least the damned ugly PT Cruiser would be consigned to history.

Every cloud has a silver lining….