As if more evidence was needed of the decline of the U.S. auto industry and the rise of India's following Tata Motors Ltd.'s expected purchase of the Jaguar and Land Rover brands from Ford Motor Co., rumors are now spreading that Tata rival Mahindra & Mahindra Ltd. could be closing in on a purchase of Chrysler LLC's Jeep nameplate.
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India's Economic Times reported Monday that Mahindra & Mahindra is in talks to perhaps acquire the Jeep brand, noting that M&M is a longtime distributor of Jeeps in India. The story quotes M&M vice chairman Anand Mahindra, saying, "We are talking to automakers around the world to discover whether there are opportunities," but the executive offers no specific comment on Jeep. Is Chrysler really that deep in the red that it must sell an iconic brand that traces its history back to the general purpose, or GP, vehicles made for the Army during World War II?
It is tough to read too much into Cerberus Capital Management LP's plans from the Indian report. Rumors have swirled for months that Chrysler is in talks with M&M about joint ventures to build cars in India that could go so far as Chrysler taking an equity stake in the automaker. If the Jeep report is related, it is possible that the current talks will stop well short of the Indians buying the Jeep nameplate, and instead would be part of a broader Chrysler international alliance strategy that has also included collaboration talks with Nissan Motor Co. Ltd.
That said, it is tough to rule out a divestiture, even one as large as Jeep. Chrysler has continued to bleed cash in the months since Cerberus acquired it, and last week laid out a plan to dealers to significantly cut its product lineup and dealership ranks over time. A sale of Jeep would undoubtedly generate a significant amount of cash for Chrysler and help toward its goal of streamlining operations. Still, it seems unlikely that the company would choose to sell off such an important part of its business so early into its turnaround under private equity ownership. - Lou Whiteman
See Economic Times story on Mahindra & Mahindra's plans for growth
See Autoblog post on a potential Jeep sale
See Dealscape post on Chrysler's dealings in India
See Dealscape post on a potential Chrysler-Nissan joint venture
See TheDeal.com story on Chrysler's streamlining plan
See Dealwatch: Chrysler
See TheDeal.com story on Tata's purchase of Jaguar and Land Rover
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The Selling off of America, piece by piece.
Corporate America is UnAmerican.