One of least best kept secrets came into fruition today, with the German car giant Daimler walking away from the US brand Chrysler that they paid a massive $37 Billion for around nine years ago.
It appear that the German car company will not be getting much of the $7.4 Billion that the private equity investment firm, Cerberus Capital Management have paid for the 80% stake. Most of the money will be reinvested into the Chrysler operations and finance arms.
The name Daimler will be transferred back over to Germany, while Chrysler will remain a US auto maker, but they are facing some very significant problems ahead, the amount of cash may seem to be a lot, but in the auto industry that amount can quickly disappear into the company and out the side.
Chrysler has found problems with the amount of gas that their cars drink, while on the other hand cars from Japan more in particular the Toyota Prius are making it harder for car companies like Chrysler to make any headway into the marketplace. This would be one area where a company like Chrysler could actually find a niche and take the battle to Toyota, it would mean smaller and light models but it could work.
The auto industry is seeing a major change what with the Chinese market opening up the way it has done, who could have predicted that, and what happens when they start exporting to the states?
Source [CNN]
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