Chrysler Group Suitors Chat Up Dealers

By: Anthony Fontanelle

As the maxim goes, it is better to leave no stone unturned. This is why Chrysler Group's suitors are reaching out to some of the biggest auto dealers in the nation to gain even more crucial insight into the automaker and the marketplace.

Bidders have contacted public traded dealership chains including Lithia Motors Inc., the AutoNation Inc. and Group 1 Automotive Inc. Further, some privately owned dealers also have been contacted.

Medford, Ore.-based Lithia CEO Sid DeBoer said that he has spoken with one of the private-equity groups eyeing Chrysler which he declined to disclose the name. The conversation concentrated on Chrysler's vehicle lineup and the future of the American auto market. "They have sought opinions about product lines and things like that from some dealer groups," DeBoer said.

The suitors seeking to acquire the American arm of Chrysler from DaimlerChrysler AG include the private equity team of Blackstone Group and Centerbridge Partners, and the Wall Street firm Cerberus Capital Management and the Canadian supplier Magna International Inc. DaimlerChrysler executive Rudiger Grude is scheduled to meet with the representatives of those parties in New York this week.

The Tracinda, Kirk Kerkorian's investment company, has given a proposed $4.5 billion bid for the ailing automaker. Fort Lauderdale, Fla.-based AutoNation, the largest dealer chain in the United States with 30 Chrysler locations, has had a "series of conversations with a couple of big private equity groups" interested in Chrysler, said the President and the Chief Operating Officer Mike Maroone.

"They were interested in our point of view on a number of issues - products, the dealer network, the health of the industry," Maroone added. "We talked about broad issues, not behind-the-scenes stuff - our view of the market." Maroone said AutoNation emphasized that it believes the industry needs to take a more customer-focused approach to building and selling cars and adopt a more rational pricing approach.

The Blackstone/Centerbridge team has spoken with Houston-based Group 1 Automotive's CEO Earl Hesterburg in the past few weeks. This information was given by individuals familiar with the discussions. Group 1 spokesman Pete DeLongchamps said that he was unaware of any conversations. Lithia's DeBoer, who took over the family business in 1968 after his father died, said that he is not surprised that potential buyers have begun to contact dealers. Lithia has more than 35 Chrysler, Jeep and Dodge retail outlets. "We have no idea as a dealer what a manufacturing company should do or who should own it or how they should go about it," he said.

"But we do know what sells and what has a lot of potential," DeBoer said. He added he would prefer that Chrysler stay with DaimlerChrysler. "They have tremendous synergy in many of the products," he said. "I just don't believe it's the right thing for the German company or Chrysler."

Every option is weighed and considered. And it is possible that a private equity would break up and sell Chrysler. Hence, the efficiency likened to that of could also be resorted when making decisions especially if it concerns the future of lots of workers.

"I don't think anybody could do that and get value. I don't think that's the risk," DeBoer said. "I think no matter who owns it whether it's Daimler, Cerberus, Blackstone or Magna, they all have to do the same thing - reorganize the cost structure, make good product choices and run a company. "Jeep brand is a wonderful brand. Dodge has got a great name in its own way. Chrysler isn't damaged by any means, there's just a lot there," he said.

Some dealers of Daimler's American arm said potential buyers should gather information from Chrysler, Jeep and Dodge retailers of all sizes. "To get a perspective and good due diligence, it would be probably best for them to talk to as many varying size dealers," said John Schenden, the owner of the Pro Chrysler-Jeep in Denver.

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