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 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, but they’ve demurred, too. That leaves Italian automaker Fiat, 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.
[See why falling behind Toyota is good for GM.]
Volvo. It’s turning into a bad year for Scandinavia. Ford, 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.
[See why Ford is veering closer to a bailout.]
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.
[See the 12 most important cars of 2009.]
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 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.