Thursday, May 24, 2007

Sales May Be Driven Higher due to Cerberus Ownership

Our friends at Autoblog are reporting that the multi-billion dollar buyout of Chrysler by Cerberus Capital Management is expected to have a positive impact sales for the car and truck manufacturer.

According to a report by CNW Market Research, some consumers see the purchase of Chrysler by Cerberus from DaimlerChrysler (NYSE: DCX) as a good sign. Apparently people prefer to buy cars from companies that are financially healthy and seem to have a positive future ahead of them. The impact on sales form this change in consumer perception could be substantial -- CNW Market Research says the increase in sales could be as much as 4.4%.

Autoblog points out that this change in perception may be short lived. Cerberus may take drastic steps to restore profitability, and this may generate conflict (and negative headlines) with labor groups. Chrysler has a long way to go to become profitable again. For one thing, it needs to stop relying on SUVs and big trucks and start building more fuel-efficient cars, since it looks the era of $3 per gallon gas is here to stay.

No comments: