So it would seem that Cerberus has no intention of not selling most of their stake in chrysler.  If Nissan had some to the table with more than 20% in their offer Cerberus probably would have taken more time to consider that deal.  For now we’ll have to settle for Chrysler making Nissan’s Titan and Nissan making a small car for Chrysler - if Chrysler is still around.

The US Treasury has told GM that no, it can’t have anymore billions of dollars, not yours.  GM was hoping that the bailout money would come before the election (or is it Cerberus that is on an accelerated time table?) in the amount of 10 billion.  So far the US has bailed out financial institutions (both GMAC and Chrysler Financial qualify) but has yet to aid any other sector.

The reason for the bank bailout is clear, if the banks fail then no more credit is available and no one can spend any money and we all get to see how our grandparents lived back in the 30s.  Even that bailout is not popular among many in the US, indeed, much of the money is going to bonuses to already really rich guys that ran their bank into the ground.  So when another big corporation like GM comes to the US government and asks for some money the US is reluctant to say the least.

GM is a more sympathetic recipient than banks are, but not by much.  One could argue that the bailout would save manufacturing jobs in the US at a time when outsourcing is the norm.  Even though GM would have to slash about 50,000 jobs from Chrysler immediately, in the long run it saves the biggest automaker in the world.  Better to see one absorbed than both die off.

There are two problems with giving taxpayer money to GM.  First, it is not clear that GM and Chrysler will both fail if left separate.  No one has made a convincing argument there.  And (still part of the first reason) it is not clear that the combined company will succeed.  I have yet to see a convincing argument that shows me the combined GM/Chrysler company make it through the next few years of poor sales.

The second problem with US aide here is if they give it to GM/Chrysler for a merged company they also have to give it to Ford, and eventually anyone that comes begging.  The line of companies in trouble will never end, better to draw the line at the banks and be done with it than see the government as a partial owner in every sector in the US market.

Renault-Nissan has a presence in the US market through Nissan, but it’s a small one.  The company has been looking for a partner in the US for some time now, they’ve proposed alliances with GM in the past.  Now, at a time when Cerberus seems like it wants to get out of the car business and has been pushing for a GM/Chrysler buyout/merger Renault-Nissan is proposing to buy 20% of Chrysler.

The two companies are already partnering on vehicles.  Nissan will make a small car for Chrysler and in return Chrysler makes the Nissan Titan and provides Nissan with Heavy Duty trucks as well.

It’s believed that Cerberus would prefer a GM/Chrysler buyout, but so far that deal seems to be halted without any avenue to get financing for the deal.  GM would need to raise a lot of cash to buyout Chrysler workers, and they can’t find a bank willing to lend it to them.

Carlos Ghosn, CEO of both Renault and Nissan has publicly denied any kind of merger as recently as July, but things have changed a lot since then.  He also states that he’s against buying up companies.

“I think that when people talk about consolidation, they imagine company A buying company B. We know this does not work,” Ghosn said at a grand opening celebration of the company’s new North American headquarters in Nashville, Tenn. “Company A buying company B is guaranteed destruction of value after a while.”

And so far he’s practiced what he preached.  Renault owns a 44% stake in Nissan and Nissan owns a 15% stake in Renault.  With both companies sharing many parts under the hood to reduce costs but otherwise remain autonomous of each other.  The only link other than the parts sharing is Ghosn himself, as he’s the CEO of both companies.

Source: Detroit Free Press

While I would prefer Chrysler remain independent I would also concede that Renault is wildly preferable as a buyer of Chrysler than GM.  Renault would keep Chrysler intact while GM would burn it to the ground keeping only bits and pieces.

With all the rumors flying around about the chrysler sale and or merger many journalists have posited that Renault-Nissan is one of the potential buyers.  It makes sense, afterall, Nissan and Chrysler have a close relationship right now.  Starting in 2010 Chrysler will build the Nissan Titan and Nissan will build a small car for Chrysler.  For that deal to take place Nissan would’ve wanted to look at the books pretty closely to make sure that Chrysler wasn’t going out of business.

With all that knowledge journalists are saying that Renault might buy up Chrysler like it did Nissan and just run the company independently.  Afterall, Renault doesn’t have a strong presence in the US and they have been clamoring for one for years now.  The addition of Chrysler would also make Renault a powerhouse spanning three continents.  Another more recent possibility is that Renault buys the Jeep brand from Cerberus and GM gets the rest.

But now we are getting reports that Renault isn’t in the running for Chrysler nor it’s Jeep brand.

“There are no discussions. We are focusing on dealing with the current market situation,” Renault spokeswoman Frederique Le Greves said. A spokesman for Nissan declined comment on any talks with the Japanese automaker which is 44-percent-owned by Renault.

So it would seem that with Renault out the only other possible buyer is GM.  And with GM buying Chrysler you can bet things would change.