Wither Chrysler?

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It’s the year 2010 and companies are bidding again for Chrysler. But this time, it’s not a distress sale. A revitalized Chrylser has slashed costs, dazzled the market with fuel-efficient models and turbo-charged sales by expanding into global markets through a series of alliances. This time it is the target of a furious bidding war between China’s Chery and India’s Tata Motors. Chrysler’s owner Cerberus Capital is leaning toward a deal with Tata’s management, which has close ties to Italy’s Fiat. The deal, if clinched, would create a one-of-a-king, globe-spanning automotive group with dominant brands each of the world’s key markets. …

Sound far-fetched? Many analysts believe that the breakup DaimlerChrysler and the sale of Chrysler to Cerberus Capital Management could well be followed in several years by the sale of Chrysler to an ambitious emerging markets player such as Chery or Tata.

Emerging markets automakers such as Chery and Tata aren’t ready to buy Chrysler today (although Tata was tempted.) But they are determined to conquer western markets over the next 5-10 years. And they know the fastest route is buying an established player like Chrysler. An acquisition of a strong western brand also offers vital access to technology, suppliers and distribution.

Chrysler CEO Tom LaSorda said yesterday he is on the prowl for global partners. And an alliance between Chrysler and China’s Chery will soon be approved by the Chinese government. Chrysler may have been the most American-centric automaker up to now. But to survive, Chrysler is now going to become one of the most global.

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