Six months later, 80% of Chrysler was sold to a US private equity firm Cerberus Capital Management for $7.4 bn. However, the difficulties that forced Daimler's management to put an end to the 1998 acquisition of Chrysler continue to trouble the Auburn Hills automaker.
According to the latest data available, it lost $2.9 bn, which includes $1.6 bn in operating losses and $1.3 bn in one-time costs in 2007, against the earnings of $857 mn in 2006.
In fact, Chrysler is not the only automaker that is grappling with troubles. The entire US automotive industry has been experiencing significant challenges for a decade and half. Some of them include considerable decline in employment, factory shutdowns, liquidation among the suppliers, huge retiree healthcare costs and consolidations. The market share of Detroit Three-General Motors, Ford, and Chrysler-in the US automotive industry has been in a state of decline for years and fell below 50% for the first time ever in the companies' history in July 2007.
Though the Detroit Three have been facing setbacks and receiving bad news, foreign producers, mainly Toyota, Honda, Hyundai and Kia, are on the growth path. Most prominently, the Detroit Three's manufacturing costs are much higher than the imports. When the market for SUV's collapsed, it eroded a major portion of the Detroit Three's profit. |
