the air

I can’t stop drooling over this car. It comes with over a thousand horses and runs on E85, otherwise known as ethanol. Considering the fact that ethanol is considered the next fuel for vehicles, this car will literally be pocket friendly on gas budgets; not like most of us can even afford a car in this price range. Oh, this car will probably get a little under 10 miles per gallon on E85. Now that is what I call “environmental” friendly.

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It’s been a while since I’ve posted a picture of some of my favorite cars. So here’s a quick rundown of some of the hottest and sexiest cars on the planet, as said by me. Oh, all of these cars are well above $100,000. No harm in dreaming.

Mercedes Benz S65 AMG

BMW 760Li

Maserati Quattroporte

Maybach 62 S

And my all time favorite:

Bugatti Veyron

I can’t stop drooling.

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Earlier, I wrote about GM being a possible suitor for Chrysler. As it turns out, GM is probably not the only manufacturer that could exercise its influence to nab Chrysler from DaimlerChrysler AG. DaimlerChrysler is looking for the quickest way to off-load the struggling division and gain some much needed cash. Although the company appears to be united in selling Chrysler, it is split on how to go about it. Some members in the board of DaimlerChrysler want to rid themselves of the division as soon as possible. Others, on the other hand, want to invest some more money and sweeten the deal for potential suitors.

At DaimlerChrysler’s sprawling Stuttgart headquarters, the decision over how to proceed has split top management and board members into opposing camps: One backs a rapid sell-off of Chrysler Group, while the other favors first completing a restructuring effort into next year to bolster the selling price. A delay might reduce the final cost to Daimler of unloading Chrysler after subtracting its $22 billion in health-care liabilities. But the sell-it-now crowd appears to have the upper hand. “The chance that Daimler will sell Chrysler by fall of this year, before a new contract has to be negotiated with the unions, is probably 100%,” says one senior DaimlerChrysler official who asked not to be named.

Three main suitors are at the steps of DaimlerChrysler, however, all three are shy to admit any potential dealings. The fore-runner is GM, followed by a private equity group, and then possible European or Asian manufacturers. GM has hinted that if it were to pursue the company, it would do so only if it could acquire the division for almost no money. This is probably the biggest thorn since it is unlikely DaimlerChrysler will agree to such terms. In addition, GM will have to handle 11 different brands in a market that is already cut-throat and one in which GM is still trying to make a profit.

Private equity firms are of particular interest since they are bent on breaking up Chrysler and maximizing revenue. They can literally enjoy increased cash revenue and possibly even go for the bigger fish by acquiring DaimlerChrysler. In addition, these firms can then sell Chrysler assets to Renault-Nissan, Tata Motors, or even Hyundai, another prospective suitor.

Private equity firms see substantial breakup value in Chrysler alone. The Jeep brand plus its factories could bring $5 billion to $7 billion. At least a few of Chrysler’s plants would be of interest to Hyundai Motor, Chinese automakers, Renault-Nissan, India’s Tata Motors, and possibly Volkswagen (VLKAY). DaimlerChrysler Financial Services, almost a forgotten asset, earned about $2 billion last year. The wild card? A private buyer would have to negotiate UAW worker buyouts and figure out who pays for it.

Although Renault-Nissan has denied interest in Chrysler, it is possible they may be interested in a part of the company. Chinese auto manufacturers could benefit greatly by pursuing Chrysler as they can expect to launch their own Chinese made vehicles in a relatively short amount of time. This is one of those deals that can greatly benefit Hyundai, which has undergone a major transformation in the past decade and has proven itself as worthy adversary to Toyota. In addition, with Chrysler on board, Hyundai will be able to cross the million mark and enjoy a stronger and more influential presence in the lucrative North American auto market. It appears that a front runner will be more clearly visible towards the latter part of 2007, before contract renewals are made by Chrysler. The only common factor amongst all three suitors is the need to satisfy those power-hungry union workers. They are definitely going to have to trim their own demands before any sale can be fabricated.

Source: BusinessWeek

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GM has expressed strong internal interest in the possible pursuit of Chrysler. DaimlerChrysler has made it clear that they are willing to shed themselves of Chrysler, if the price is right. However, plenty of hurdles lie ahead for GM and Chrysler should a deal materialize. Both companies are struggling to make a profit and GM is in the midst of a major turnaround plan. In addition, Chrysler has produced some of the most exotic sedans at affordable prices, but have failed to turn a profit. If GM were to acquire Chrysler, there would be an immediate fat-trimming session as GM would want to integrate their products with Chrysler’s as much as possible.

GM executives have also war-gamed specific strategies for cutting costs and streamlining operations if they do acquire Chrysler. They have picked through various product lines to determine whether two or more can be built on the same platform to trim costs and simplify purchasing. Possibilities include building the next-generation Dodge Ram pickup with the same platform as the Chevrolet Silverado and using the Jeep Wrangler platform for the Hummer H4 concept car from GM. GM executives also see an opportunity to improve Chrysler’s profitability by buying parts from around the globe.

Since GM is struggling to satisfy their own shareholders, it is possible that they would prefer to acquire Chrysler for as little money as possible. In essence, they would want Chrysler at a lucratively low price so that they can offset union expenses and dealer consolidation costs. In addition, the unions would have to concede numerous benefits before GM could even think about going after Chrysler. GM’s health-care costs are around $50 billion and Chrysler’s is near $22 billion. Add those two together and GM definitely has a major problem on their hands.

Then there is the possibility that the two companies would close plants and marry their manufacturing operations. Sean McAlinden, chief economist at CAR, says that alone could mean the reduction of 10,000 to 15,000 union jobs. The UAW would have to come to the table willing to make significant concessions.

I still stand by my words that GM is not going to acquire Chrysler because DaimlerChrysler is not going to release Chrysler without some significant return. In addition, both Renault-Nissan and Hyundai are possible suitors since they are yearning for a stronger presence in the US. It is possible that Chrysler could enter into a mult-lateral agreement with another manufacturer to ease production costs and engage in revenue sharing. In addition, there is also the likelihood that a GM-Chrysler merger could cause some trouble with anti-trust laws. It will be interesting to see how events unfold and where Chrysler ends up.

Source: BusinessWeek

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One of the biggest questions relating to the automotive industry this week has been, “Is GM going to buy Chrysler?” The answer to this question is bound to have significant impact throughout the entire industry and could easily become the most significant event of 2007. Although Chrysler has introduced numerous vehicles with exotic styling, it has struggled to turn a profit. DaimlerChrysler has hinted strongly that the Chrysler division is holding it back from success and they officially put Chrysler on the selling block. However, many analysts are suggesting that an outright purchase of Chrysler by GM is highly unlikely given that GM has its own financial woes to consider first.

Jim Hall, an automotive analyst at consulting company AutoPacific, points out that GM already bears a heavy burden of $5 billion to $7 billion a year in health care and pension costs for current and retired employees. That’s money the world’s biggest automaker can’t spend on product development or marketing, and taking on similar obligations at Chrysler would increase those costs by a minimum of 30 percent, he said.

Surprisingly, DaimlerChrysler has recently unveiled a turn-around plan for Chrysler that hopes to yield a profit by 2008. It calls on the trimming of approximately 13000 jobs, roughly 16% of its North American workforce. Both GM and Chrysler are struggling with pension and health-care costs. As such, both companies are looking into ways to trim the number of employees and shutter production facilities. A possible avenue that GM is looking into is shared development and production costs. By creating similar components, both companies can share development costs and reduce overall costs. Analysts are also suggesting that Ford and GM have, in the past, developed a transmission that has proven to be quite successful and a similar deal may be in the works between GM and Chrysler.

Reports in The Wall Street Journal and The New York Times Friday said Chrysler and GM have held discussions related to developing a large sport utility vehicle like the Chevrolet Suburban or Tahoe, which Chrysler doesn’t have in its current product lineup. The Journal also said the two are looking at sharing small cars developed by a unit of GM in South Korea.

I don’t think GM is going to purchase Chrysler until it is able to control its own spiraling costs. However, to better compete with Toyota, Honda, and other manufacturers, it seems that the best thing for Chrysler and GM to do is to create an alliance. This alliance could further lead to a much more deeper cooperation and possibly leaner companies that are better equipped to deal with the onslaught of foreign competition.

Source: MSNBC.

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