DaimlerChrysler’s sale of its Chrysler division to Cerberus Capital Management will not adversely affect customers of the brand in South Africa, says Jeff Osborne, CEO of the Retail Motor Industry Organisation of South Africa (RMI).
In a statement, Osborne says the acquisition of 80,1% of Chrysler by the New York-based private equity fund — which has several interests in the automotive sector — is regarded by the RMI as a positive move made in the best interests of creating the greatest overall value for both brands.
Speculation has been rife in automotive circles since February that DaimlerChrysler has been looking for a buyer for its Chrysler division, with the deal coming as no surprise to international observers. In terms of the sale, Chrysler will be renamed Chrysler Holdings.
Effectively, though, DaimlerChrysler has paid heavily to have Chrysler taken off of its hands. In 1998, the company spent $37-billion buying the auto maker — then the third largest in the United States — and poured billions more into the company to keep it afloat. In return, it will receive $7,1-billion from Cerberus but retain Chrysler’s debts — leading to a cash outflow, financial observers say.
Osborne points out that since introduction, brands in the Chrysler stable — Chrysler, Jeep and Dodge — have been marketed independently of Daimler models in South Africa.
“While the restructuring means that Chrysler will be serving a new master, the object of the buy-out has been to create the best possible value for the brand. The company gets a new start — and in that sense the sale is likely to be of benefit to customers.”
Osborne says that from a dealer perspective, the RMI envisages that renegotiation of franchise agreements will be effected when the deal becomes final in the third quarter.
Chrysler is due to launch in South Africa next month the latest model in its expanding line-up — the Sebring. A spokesperson for DaimlerChrysler South Africa says the launch will go ahead as planned.
“It’s business as usual. The sale of Chrysler will have no impact whatsoever on our marketing plans,” he says.
In a statement, DaimlerChrysler’s chief executive, Dieter Zetsche, says the sale also marks a new beginning for the German parent, which will be renamed Daimler. “With this transaction we, too, have created the right conditions for a new start,” he says.
Apart from its latest acquisition, Cerberus has automotive holdings in a US-based bus company as well as in GDX Automotive, a globally represented concern with interests in glass encapsulation, polyurethane, rubber and thermoplastic moulding, bonding and compounding. In China, GDX is billed as a leading automotive partner to Volkswagen.