DaimlerChrysler Sale of Chrysler AG at a bargain price

Investors planning to buy Chrysler are advised to become marketing experts and prepare $7 billion as payment. It’s true that the Chrysler deal looks better on paper because of the bargain the buyer is getting.

Chrysler Group’s price ranges from $5 billion to $7 billion, which is quite a distance from the original merger’s $36 billion valuation — and in line with what most analysts have observed with the current price point Selling DCX for Chrysler is trying to pay its buyer so it can get rid of its loss-making American arm once and for all, with no thought of profit.

The new owner would also have to market its way out of one of the biggest automaker inventory floods of all time, made up of excess steel that pushed Chrysler to the brink last year. Plus, there are other issues that new buyers would have to deal with, like branding and positioning issues.

Chrysler, the American arm of Daimler and maker of top-of-the-line Jeep wheels, hasn’t been able to clearly define and differentiate its trio of brands, something pundits at last week’s New York Auto Show in Ask a Question. They said that Chrysler failed to do this. Vic Doolan, non-executive chairman of consulting firm Courland Automotive Practice, said the automaker has overlaps with Dodge, Chrysler and Jeep models, which instead of competing with other brands, instead compete with each other. Doolan also recommends the automaker expand its global footprint to reach fat-growth emerging markets like China.

John Morel, director of product and market planning at American Suzuki Motors Corp., has also offered some advice to Chrysler. He said that before spending big on marketing, Chrysler needs to differentiate its brands because the company has too many similar products like Dodge Durango and Chrysler Aspen.

Mr. Morel has observed that Chrysler has stretched its Jeep brand too far, saying the Commander is already hurting sales of the Grand Cherokee, while the Jeep Compass competes with the Dodge Caliber, which is not good.

Auto consultant Gordon Wangers has also made his own observation, saying that Jeep’s crown jewel, the Grand Cherokee, is being ignored by Chrysler. He also pointed out that the Dodge Ram also needs an overhaul so that it can once again compete effectively as a key player in the full-size pickup truck segment. The model was last revised in 2001 and is currently considered the oldest in Detroit.

Last week at DaimlerChrysler’s annual meeting, CEO Dieter Zetsche confirmed the company’s worst-kept secret: The automaker is in talks with unnamed parties to sell Chrysler.

Since Chairman Zetsche announced that Chrysler was for sale, reports of its potential buyers have flooded the web, and only recently has the number of competitors narrowed down to two New York financial firms, the Blackstone Group and the private equity firm Cerberus Capital Management and Canadian auto parts supplier Magna International Corporation. And just last week, Kirk Kerkorian also offered a $4.5 billion offer for Chrysler.