By Lloyd Frazier
With the Canadian auto supplier, Magna International, inching ever closer to clinching the Chrysler deal with Daimler-Chrysler, comes other complications. The Detroit Free Press article describes how this can “create additional complications to their (Magna) relationship with GM and any other of their customers that compete directly with Chrysler.” As if GM doesn’t have enough to think about. Now they might have to come up with a plan to replace Magna as their supplier. Chrysler is Magna’s largest customer with GM right behind them in second place. Imagine being in business and one of your suppliers critical to your success buys your competition. It happens all the time in the business world. Being involved in the software business, I see it quite regularly. It’s sort of like professional sports. You have this great, key player that is critical to your team’s success and he goes all “free agent” on you and signs with your arch rival in your division. Now you have to scramble to fill that void. GM and several other automobile manufacturers will feel the same pinch. The biggest problem in all of this is that Magna could gain a “greater insight into its competitors’ pricing. It complicates everybody’s life” (Detroit Free Press.)There are two other serious bidders, Blackstone Group and Cerberus Capital Management, that are after Chrysler. Magna makes the most sense for Chrysler’s continued presence on this planet since they have a direct stake in the industry. The formerly mentioned groups are in it for the fast money. Maybe even breaking Chrysler into pieces. It has been prognosticated that Jeep may be the only badge that survives a break up like that. Keep your eye on this one, folks. The Big 2.5 may be down to 2 in the near future. It has been an interesting roller coaster ride.
Lloyd, signing out…
