Daimler Chrysler causes restructuring
The Chrysler Group is being sold to a private equity firm and this could mean major restructuring in the US auto industry. DaimlerChrysler SA said that nothing would change in SA for the time being.
New York based Cerberus has agreed to buy an 80.1% stake in Chrysler for $7.4-billion. The US auto industry is struggling with huge health-care and pension liabilities and labour contracts that guarantee jobs. This move might help management to rewrite the rules, according to Jeremy Anwyl, president of Edmunds.com.
The United Auto Workers’ union has assured Cerberus it was willing to grant some concessions and has publicly supported the deal.
Cerberus has a reputation as a strip-and-flip group, but Burnham Securities analyst David Healy said Chrysler workers should not be too worried that Cerberus would live up to its reputation. Healy believes that Cerberus would want to make Chrysler solid and healthy and take it public.
Anwyl says that Chrysler should bring out more competitive products and stop cost-cutting at the expense of aesthetic quality.
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