News of Chrysler's Buyout is affecting its sales

A week after the announcement of DaimlerChrysler of its plan to finally sell its Chrysler arm maker of quality Jeep windshield wiper motor, dealers have reported to Chrysler executives that customers were inquiring if their cars would still be covered by warranties.

The announcement has also affected Chrysler’s sale and declined by 8.3 percent on the same month that the announcement was made. Chrysler’s executives have attributed a great part of the decline to consumers’ uncertainty on Chrysler’s future.

Industry analysts share the same concern as that of Landry stating that the continued publicity about the possible buyout of Chrysler will definitely hurt the company in showrooms especially in the Midwest where Chrysler has more facilities and gets more media coverage as the bidding process continues. It is still unclear whether Chrysler can still recover especially since its future owner is still unknown.

It can be noted that Chrysler has started the year with a decent number of sales with an increase of 1 percent compared to the same month a year ago and this is despite the fact that the overall US auto sales were down more than 4 percent. And then came February to end everything for Chrysler Group including its restructuring plan that will shed 13,000 jobs.

The world’s largest automaker, General Motors Corp. has expressed its interest in making a bid for Chrysler but recently the focus shifted to the Canadian auto parts supplier Magna International Inc. and two other private equity groups, Cerberus Capital Management LP and a consortium of investors led by Blackstone Group. Magna chief Frank Stronach in an interview told Canada’s Globe and Mail newspaper that the company is discussing possibilities with Canada’s Onex Corp. conglomerate about teaming up on a bid.

Kirk Kerkorian an American billionaire has also expressed his interest on Chrysler and has made a $4.5 billion bid for the money-losing arm of DaimlerChrysler. It can be remembered that Kerkorian has tried in the past to take control of Chrysler unfortunately he was toppled by Daimler-Benz on the acquisition of Chrysler in 1990.

Daimler-Benz AG has purchased Chrysler AG for $36 billion in 1998 and now it is selling Chrysler at a bargain price amounting only to $13.7 billion. DaimlerChrysler reportedly is meeting with the private equity firms but has not yet set up a similar meeting with Kerkorian’s Tracinda Corp.

Financial studies are continuously being conducted and according to Landry the March sales obtained by Chrysler are a sign that the automaker has somewhat recovered from the initial shock of sale announcement. Chrysler’s vehicle sales are still down by 4.6 percent for the month however the automaker in turn beat its internal goals by 1 percent. March 2006 was the best March sales that Chrysler had in four years. Landry also said to expect improvement in April and May.