South Korea’s Hyundai Motor Co has had talks with Chrysler LLC owner Cerberus Capital Management about a potential acquisition of the struggling U.S. automaker’s Jeep brand and possibly other assets, people with knowledge of the talks said on Friday.
The emergence of South Korea’s largest automaker as a potential bidder for at least part of Chrysler comes on the same day General Motors Corp said it was abandoning its own pursuit of an acquisition of its cross-town rival.
Cerberus also plans to restart talks [with] other potential partners, including Renault-Nissan, the sources added.
First, the obvious point: people with no “knowledge of the talks” wouldn’t say things like that.
Actually, Hyundai and Jeep fit together fairly well. Jeep, unlike the other Mopar brands, has a fair amount of brand equity these days, and there’s very little overlap in the product lines: the nascent Kia Borrego is probably the only model that would be rendered superfluous. (Yeah, there’s the Jeep Compass/Patriot, but they were superfluous before there was any merger talk.)
Getting hold of Chrysler’s extensive dealer network might theoretically be useful to Hyundai, which still has a reputation for fast-talking guys in plaid jackets catering to subprime customers. But the advantage goes away if they have to sell actual Chryslers as part of the deal, so I suspect that if there’s any deal here, it will be just for Jeep.
How to dispose of the rest of the company? We know that Nissan is dumping its big Titan truck after 2010, replacing it with a version of the Dodge Ram, and that Nissan will be building two small cars for Chrysler, one a Versa variant for South America and another to be sold in Chrysler’s “global markets,” such as they are. And Carlos Ghosn has long made noises about adding a US-based affiliate to the existing Nissan/Renault partnership. Nissan doesn’t need Jeep, really, since they have enough SUVs for a dwindling market; assuming Jeep goes to Hyundai, Nissan could reposition Dodge as strictly a truck brand the Viper will be spun off to a third party, the Challenger will run its course, the rest don’t matter and use the Chrysler channel for minivans (wouldn’t you rather have a Town & Country than a Caravan, even a Grand one?), the aforementioned Nissan-built small car, the successor to the 300 (let us pray), and the occasional revamp of a Renault Euromobile, though this latter might be tricky, since the one Renault that might sell well here, the mid-sized Laguna, could steal sales from Nissan’s Altima, built on the same platform.
A third, dimmer prospect: Volkswagen, for whom Chrysler is already building a minivan. We know VW wants to increase its market share in the States in fact, they’re building a plant in Chattanooga to take advantage of the relatively-weak dollar. But I suspect they want to do it under their own name, not somebody else’s.