Who Wants to Buy an Ailing Car Company?

With sales plunging and the auto industry in a tailspin, it’s a great time to get a deal on a car. But think big: For a few extra bucks, you might be able to buy the whole company.

Here’s the list of carmakers on the block:

Chrysler. The nearly insolvent automaker has basically said it can’t survive on its own. It wants General Motors (GM) to buy it, but GM has its own huge problems and doesn’t want to add Chrysler to them. Chrysler’s next preferred suitor is Nissan-Renault (NSANY), but they’ve demurred, too. That leaves Italian automaker Fiat (FIATY.PK), which has agreed to partner with Chrysler – but not put any money on the table. In fact, a Fiat deal would require at least $5 billion in additional financing from the U.S. government. Which means it might not happen. So anybody who put up the right amount of cash could still grab Chrysler.

Saab. GM, which has owned the Swedish automaker since 2000, is cutting Saab loose as part of its vast restructuring plan. With no buyer stepping up, the move has forced the quirky carmaker to declare bankruptcy. It’s still for sale – and the price is dropping.

Hummer. This is another division GM plans to unload. It’s been looking for a buyer since last summer, but none has materialized. GM now says it may simply phase out the gaudy brand, whose heyday has clearly passed.

Saturn. This GM division is headed for extinction, too, unless a buyer emerges before GM starts to phase out the entire lineup.

Volvo. It’s turning into a bad year for Scandinavia. Ford (F), which owns Volvo, says it’s conducting a “strategic review” of the Swedish brand. That means it’s for sale, just like the Jaguar – Land Rover division that Ford sold last year to India’s Tata Motors (TTM).

Would anybody buy one of these beleagured automakers? Actually, yes. In fact, it could be a key opportunity for a foreign company hoping to enter the U.S. market. “Buying one of these companies sounds attractive,” says analyst Tim Dunne of J.D. Power & Associates, who specializes in the Asian car industry.

You get an established brand, access to distribution networks in the United States, access to vehicle platforms and technologies, and maybe an assembly plant or two.

He adds that it’s a lousy time to make such a big purchase. But if the offering price falls to fire-sale levels, a deal could look too good to pass up.

Here’s who might have the wherewithal and motivation to buy a car company:

Chery. China’s biggest car company already exports cars to a number of developing nations, and has said it wants to sell Chinese-made cars in the United States. Industry reports suggest Chery is interested in buying Volvo, as a way to crack into the developed world and gain access to top technology.

SAIC. This Chinese automaker, otherwise known as Shanghai Automotive Industry Corp., is owned by the municipal government of Shanghai, and it already has longstanding partnerships with GM and Volkswagen. “If there were to be a Chinese buyer,” says Dunne, “SAIC and Chery probably have access to the most financing and government support.” The sale of American assets to Chinese firms has been controversial before, and it probably would be again. But China already buys trillions of dollars worth of U.S. government securities, and if it were to buy an American automotive nameplate it might even lower Washington’s bailout costs.

Grupo Salinas. This Mexican conglomerate already sells home-grown cars and motorcycles, which its banking arm helps finance. “They’ve got a strong retail and financial footprint,” says Craig Cather, CEO of automotive consulting firm CSM Worldwide. “They could finance a deal.” The catch is that Grupo Salinas mainly sells in Latin America, where cars produced in high-cost U.S. factories would probably be too expensive. So any deal would have to be a tremendous bargain.

Toyota (TM) and Volkswagen. Virtually every car company is hurting, but these two biggies could still muster the cash to make a purchase, at the right price. Asian and European automakers, however, tend to prefer investments close to their home turf. And adding a troubled competitor to the portfolio could compound the challenge of digging out from a tough recession.

Nissan-Renault. The company is already a Japanese-French hybrid, and CEO Carlos Ghosn has indicated that Nissan wouldn’t mind adding a third leg to the proverbial stool - namely, a partner in Detroit. Chrysler and Nissan already have ties, but Ghosn has dismissed an all-out purchase of Chrysler as too expensive. With bankruptcy seeming increasingly likely, however, Chrysler's perceived value is probably falling. A threshold moment might be approaching when Nissan decides to jump. (And it might be after a bankruptcy filing, not before.)

Saturn lovers. Apparently there are a few. When GM officially announced that it intended to offload the struggling brand, Jill Lajdziak, the GM exec in charge of Saturn, sent a letter to 1.5 million customers suggesting that Saturn might continue to operate as an independent company. But somebody would have to buy it first. A group of dealers or other investors could band together and make a bid, or another well-heeled buyer might surface. No reasonable offers refused.

Disclosure: no positions

Comments

[babyray:]

I agree. Before you know it the Chinese will be selling their vehicles at Wal -Mart and all these good paying manufacturing jobs will be lost . Be American!! Buy American!! Drive American!!

Feb 22 11:49 AM

[Jonathan1975:]

Unfortunately, this is why GM is doing so poorly. I have owned 4 cars now, the first 3 were all Japanese. In 2007, GM finally gave me a reason to buy an "American" car with the Saturn Aura--the car is actually a German car that is assembled in the U.S. I don't quite get why GM would finally give Saturn an attractive and highly competitive car line-up and then a few years later eliminate the brand. Mean while Pontiac, the line-up that epitomizes everything wrong with American cars in poor quality and bland boring designs, is continuing to live on...I see now that Pontiac is trying to sell a new G8 and comparing itself to a BMW 5 series. Wrong again, no one says I'll get a Pontiac over a BMW. Bad marketing and odd selections keep hurting GM.
Call me crazy, but if you want to compete in the luxury sports sedan market, shouldn't you put the car under the Cadillac or at least the Buick label... If GM is determined to eliminate Saturn, they should first strongly consider changing all the Saturn dealerships to Opel dealerships, since half of the line-up and all of there cars are German Opel cars assembled in the U.S.

Feb 22 12:37 PM

[Larry M.:]

If you really want to know how Wall Street and DC got us in this Twisted Globalist mess and what we can do about it then Click Below.

breakingfreeinamerica..../

Feb 22 01:09 PM

[reality chk:]

Thanks
You are Right.
It is a twisted mess brought upon us by some creative (crooked, greedy, one step out of jail) bankers and wall street predators. that think they know everything and you are always doing everything wrong.


On Feb 22 01:09 PM Larry M. wrote:

> If you really want to know how Wall Street and DC got us in this
> Twisted Globalist mess and what we can do about it then Click Below.
>
>
> breakingfreeinamerica..../

Feb 22 02:23 PM

[reality chk:]

Jonathan
You are exagerating. The Saturn Aura is build entirely here, some of the designs came from Europe as well as from other design centers. The Astra is the only other model that has European roots. You Pontiac comments are in line with what GM is trying to do with the pontiac brand and this is been in the last 3 years when they took out the Bonneville and now the Grand Prix.
Bottom line is Buy only American..


On Feb 22 12:37 PM Jonathan1975 wrote:

> Unfortunately, this is why GM is doing so poorly. I have owned 4
> cars now, the first 3 were all Japanese. In 2007, GM finally gave
> me a reason to buy an "American" car with the Saturn Aura--the car
> is actually a German car that is assembled in the U.S. I don't quite
> get why GM would finally give Saturn an attractive and highly competitive
> car line-up and then a few years later eliminate the brand. Mean
> while Pontiac, the line-up that epitomizes everything wrong with
> American cars in poor quality and bland boring designs, is continuing
> to live on...I see now that Pontiac is trying to sell a new G8 and
> comparing itself to a BMW 5 series. Wrong again, no one says I'll
> get a Pontiac over a BMW. Bad marketing and odd selections keep hurting
> GM.
> Call me crazy, but if you want to compete in the luxury sports sedan
> market, shouldn't you put the car under the Cadillac or at least
> the Buick label... If GM is determined to eliminate Saturn, they
> should first strongly consider changing all the Saturn dealerships
> to Opel dealerships, since half of the line-up and all of there cars
> are German Opel cars assembled in the U.S.

Feb 22 02:32 PM

[captmike:]

"Buy only American" when talking about the automobile industry is absolute nonsense. Buying Ford, GM or Chrysler doesn't guarantee that the parts originated in the US or that the car was assembled in the US. It's a strawman argument to justify bailing out the UAW at the expense of non-union US autoworkers.

Feb 22 03:17 PM

[speculari:]

captmike is correct in many, many ways. A number of years ago, the Ford Escort was among the first cars designated as a "World Class "car. Yeah, that's right, Ford, and even the U.S. Gov't. was promoting the fact that the car was comprised of many different (but, top quality) components from several countries. At that time, Canada, England, Germany, France, Italy, & Brazil, were all producing parts and components (including engine blocks) that were assembled in the U.S.!
For at least the last 30 years, we have had the "global" circumstance as it relates to auto production. The players & countries may have changed a bit as far as certain of the components go - but, go and take a very close look at your own Ford, Chevy or, Chrysler. Open the hood or the driver door & then look closely at the manufacturing "nameplate" or, country of origin "stamps" . You will, very likely, find that your auto was assembled in Windsor, Ontario or, that the master cylinder may have been made in Taiwan or, that an engine block or header may be stamped "Germany" or, a fuel systems component may be from Brasil or, China or, England. Yes, we still make & assemble many, many good parts, components, & assembled automobiles in the United States of America but, please, do not "pee on your shoes and imagine that it is raining".

Feb 22 07:52 PM