Chrysler's New Hybrid

That Chrysler is in bankruptcy isn’t news to any one who isn’t in a coma or suffering from senile dementia. Everybody’s talking about it, and they all have their own opinion about what the government’s role should be and the validity and/or of utility this unprecedented intervention. They may or may not have all the numbers and may or may not even care about the numbers. They all know one thing: it’s all a big ole mess.

Chrysler wants to sell its profitable parts to a new company that would be owned by the UAW and its pension fund, Fiat and the US government. Call it an asset transplant. Many fear that the result will be more akin to Frankenstein’s monster, though.

One fact that hasn’t been swept under the rug so much as deemed not interesting enough to warrant coverage is that Chrysler’s finance arm is going to be cut off and discarded. It apparently has withered past the point of possible rejuvenation. And Frankenstein’s monster doesn’t need a withered arm.

Instead, Chrysler dealers will direct buyers to GMAC for financing. Although GM sold the majority of its finance company in a voluntary amputation (some might even say castration), it still holds a stake in the company.

Fiat would gain a 20% stake in the “new” company with the option to increase it to 35% after meeting certain benchmarks. They’re not really offering cash for the Chrysler stake so much as access to its dealer network in Europe, where Chrysler has no visible presence today, along with technology to build small, fuel-efficient cars (like that should be a secret worth giving up equity for). They’ll get the benefit of Chrysler’s dealers in a market where they have the same stature as Chrysler has in Europe.

Meanwhile, Fiat is in negotiations with GM to acquire its Opel unit (for cash, this time), primarily to expand and solidify its European presence. And since GM is desperate to unload assets to generate cash, Fiat can probably get Opel at a good price.

Confused yet?

The twists and contortions and bluffs and bluff-callings and posturing make the whole mess hard to understand. A schematic of it all would look like a pair of incestuous cousins’ family tree.

Think about it: early next year, you’ll be able to go to your local Chrysler dealer, buy a Fiat (or possibly an Opel) and finance it through GM.

If that’s not a mess, I don’t know what is.

Chrysler has said it wants to build a hybrid car, and if all these deals go through, they’ll have one.