Viper under review

[Kayvan]

http://online.wsj.com/article/SB121984483240576415.html?mod=hpp_us_whats_news

 

[dbk]

Personally I think the implication here is that Chrysler is going to get rid of the Viper one way or another, and they are at least making an effort to appease the faithful that they didn't just kill it without a second thought. If they can't spin it, don't expect to see it around much longer.

 

[skyrex]

If I understand the article correctly, they are considering selling the name and ability to make further cars in the "Viper" line.

How would that work? Would they sell to an established auto company (obviously not the rest of the big 3) or sell the factory where the Vipers are made with the name to somebody who wants to make it as a specialty sports car. Wouldn't Chrysler keep it if it was profitable?

 

[RALPHIE]

Chrysler better retain some rights to the "Viper" name copyright, if they sell it to a 3rd party. Otherwise, it'll be another "GT40" fiasco, if they decide to remake the car in another 25 or 50 years. :ack

 

[FlorIdaho Chris]

Chrysler better retain some rights to the "Viper" name copyright, if they sell it to a 3rd party. Otherwise, it'll be another "GT40" fiasco, if they decide to remake the car in another 25 or 50 years. :ack

Agree with your points, but first Chrysler has to survive the next 25-50 years. Without some serious changes they may go the way of AMC. Hiring Lazard as an adviser almost certainly will lead to a spin off. Unfortunately the current debt environment makes the financing of any spin off unlikely IMHO.

 

[Kayvan]

Would a Saleen or Roush take this over or is it more a Tata or Proton?

Any guess on financial metrics?:

-Sales: ~1500 units/yr
-Invoice Cost: $78.5K
-Revenue: ~$125 Million? (break even)
-Employees: 115
-Plant/equipment: ?

I have no clue of plant, inventory, debt or brand value.

Based on 1x revenue multiple, the Viper Club's membership could chip-in to buy it @ $13k/each.:biggrin

---------
Bloomberg:

Possible Price

``My bet will be they will definitely be able to unload it,'' for a price of ``maybe $100 million,'' said James Gillette, an automotive consultant at CSM Worldwide Inc. in Grand Rapids, Michigan, who does asset valuations for customers.

Chrysler's announcement comes as it rebuilds sales of the sports car, which is its most expensive vehicle, with prices starting at $88,125, and is hand-built at a Detroit plant slated to close by mid-2011. U.S. sales of the Viper more than doubled this year through July, already exceeding the 435 sold in all of 2007. Annual sales reached 2,103 in 2003.

The Viper began as a 1992 model and was considered the creation of Chrysler's then-president, Robert Lutz, who is now vice chairman of GM.

Potential Buyers

Saleen Inc., a specialty-vehicle developer based in Troy, Michigan, is a potential buyer, said Mike Wall, also of CSM Worldwide in Grand Rapids. Saleen already does early assembly work on the Viper, and its vice chairman, Chris Theodore, helped design the original Viper and the Ford GT, a low-volume sports car sold for about three years starting in mid-2004.

Kim Brugger, a Saleen spokeswoman, said the company isn't involved in talks with Chrysler.

Custom-vehicle builders such as Panoz Auto Development Co. or Shelby Automobiles Inc. also would be logical buyers, Gillette said. Such builders would be able to continue the car for many years, he said.

Amy Boylan, president of Shelby Automobiles, said in an e-mailed statement that the Las Vegas-based company is ``not interested in purchasing the sports car from Chrysler at this time.'' John Leverett of Hoschton, Georgia-based Panoz didn't immediately return voice-mail messages seeking a comment.

 

[Cobrar]

I would guess the PE firm that owns Saleen. Saleen really needs a focus vehicle to build on (no pun intended) and Viper has the benefit of an established owner base.

 

[281cammer]

They are foolish. It's their flagship car. It's purpose is not to sell a million units in one year. It's purpose is to bring excitement to the company. Kinda like Ford, the year after the GT was built they were bitching about the lack of sales of them. If marketing dept, etc is that stupid to blame financial burden on lack of GT sales, they need to go back to community college. You'd figure Chrysler, Ford, GM etc would be smart enough to realize the purpose of such vehicles. Your neon, focus, cobalt, etc are your cash cows.

 

[dbk]

Agree with your points, but first Chrysler has to survive the next 25-50 years. Without some serious changes they may go the way of AMC. Hiring Lazard as an adviser almost certainly will lead to a spin off. Unfortunately the current debt environment makes the financing of any spin off unlikely IMHO.

I do not think Chrysler will survive, and frankly, I don't see how they will. The only way they survive is if Cerberus commits to endlessly dumping cash into an already flaming pit.

They have by far the weakest product lineup, build some of the most poorly rated and recognized vehicles, are burning at least 1.7-2.5 billion in cash per quarter with only $9 bil in the bank, have ceased leasing operations that propped up massively flagging sales numbers, and in what is probably the worst indication of their future, have very, very little for the next product cycle in a hypercompetitive industry where constant reinvention is key. We're talking about a company that's sales have flagged 36% when they already have single digit market share.

I've said it from the start, Cerberus didn't do their due diligence on what it takes to run a massive manufacturing firm that takes years, not months, to change. It is exceedingly hard to slash and burn your way to profitability in this business, and at this point, market conditions change so rapidly due to so many variables that turnarounds A,B,C and D are very likely to fail by the time they've been implemented. Look at their track record of acquisitions in the industry. They got into GMAC at what may be recorded as the worst time in history, as they've been absolutely annihilated in the car business, and taken it ten times harder from the fiasco that is ResCap. Then they get into Chrysler and Chrysler financial, and that goes even worse. Not good.

Can someone point me to the Chrysler upside at this point? The only three things you want from the brand are Ram (killed by gas prices), minivans (killed by tastes), and Jeep (not big enough to make a difference). And oh yeah, you can't sell the brand globally, because there is zero evidence anyone can sustain a profitable vehicle manufacturing enterprise based solely in the United States at this point. Ford has already achieved statistical quality parity with Toyota on a 3-year basis, and it's done nothing to help them. Toyota themselves have felt the pain of U.S business. When the aggregate U.S economy begins to recover it will get better, but the old school U.S auto business is gone forever. Well, now they have to face the prospect the most attractive thing about Chrysler is giving a global brand access to a U.S dealer network.

So good times in Auburn Hills. On the good side, Ford and GM would benefit tremendously by slicing up that pie if Chrysler goes bye bye. ON the bad side, the shock to the supply base if Chrysler burns may do irreperable damage to one of the other two as well.

Who wants to move to Detroit! :lol

 

[RALPHIE]

So, who will get Jeep this time?

 

[598]

The viper has been around for a long time. Past its primary Halo effect. The GT was always going to be a short run car. In that regard it makes some sense to try to sell the viper. As far as the GT sales went, If the dealer gouging was controlled, Ford would have sold all of the GT's that were initally planned. I can tell you that my 2006 sticker car that became a $200,000 car with 600 miles on it made sure I didn't buy one new from Ford. This statement is not meant to be inflamatory, just to address why I believe sales softened so much late in the GT run.


Steve

 

[B O N Y]

First I heard that Ford had a problem selling the run.

4038 was a large production if you want to compare it to Ferrari or Lambo.

Dealers are independent businessmen and should be allowed to price on what the market demands.

That is the American way!

 

[Cobrar]

I do not think Chrysler will survive, and frankly, I don't see how they will. The only way they survive is if Cerberus commits to endlessly dumping cash into an already flaming pit.

They have by far the weakest product lineup, build some of the most poorly rated and recognized vehicles, are burning at least 1.7-2.5 billion in cash per quarter with only $9 bil in the bank, have ceased leasing operations that propped up massively flagging sales numbers, and in what is probably the worst indication of their future, have very, very little for the next product cycle in a hypercompetitive industry where constant reinvention is key. We're talking about a company that's sales have flagged 36% when they already have single digit market share.

I've said it from the start, Cerberus didn't do their due diligence on what it takes to run a massive manufacturing firm that takes years, not months, to change. It is exceedingly hard to slash and burn your way to profitability in this business, and at this point, market conditions change so rapidly due to so many variables that turnarounds A,B,C and D are very likely to fail by the time they've been implemented. Look at their track record of acquisitions in the industry. They got into GMAC at what may be recorded as the worst time in history, as they've been absolutely annihilated in the car business, and taken it ten times harder from the fiasco that is ResCap. Then they get into Chrysler and Chrysler financial, and that goes even worse. Not good.

Can someone point me to the Chrysler upside at this point? The only three things you want from the brand are Ram (killed by gas prices), minivans (killed by tastes), and Jeep (not big enough to make a difference). And oh yeah, you can't sell the brand globally, because there is zero evidence anyone can sustain a profitable vehicle manufacturing enterprise based solely in the United States at this point. Ford has already achieved statistical quality parity with Toyota on a 3-year basis, and it's done nothing to help them. Toyota themselves have felt the pain of U.S business. When the aggregate U.S economy begins to recover it will get better, but the old school U.S auto business is gone forever. Well, now they have to face the prospect the most attractive thing about Chrysler is giving a global brand access to a U.S dealer network.

So good times in Auburn Hills. On the good side, Ford and GM would benefit tremendously by slicing up that pie if Chrysler goes bye bye. ON the bad side, the shock to the supply base if Chrysler burns may do irreperable damage to one of the other two as well.

Who wants to move to Detroit! :lol

+1

I always wondered who did the analysis when Cerebus decided to enter this business. Didn't make sense then or now.

As you mentioned, should Chrysler exit the marketplace, there will be a real 'hangover' on the supply base. The big guys are going to get bigger (faster) and the leverage (in purchasing) will change again. Guys like Magna already have considerbale clout and may become just too large to reckon with.

 

[canuck]

Chinese Chrysler,Vipers and minivans?

 

[PILOTJPW1]

Now, where in the world did you here this?

They are foolish. It's their flagship car. It's purpose is not to sell a million units in one year. It's purpose is to bring excitement to the company. Kinda like Ford, the year after the GT was built they were bitching about the lack of sales of them. If marketing dept, etc is that stupid to blame financial burden on lack of GT sales, they need to go back to community college. You'd figure Chrysler, Ford, GM etc would be smart enough to realize the purpose of such vehicles. Your neon, focus, cobalt, etc are your cash cows.

Ford's Gt plan was executed exactly as planned and forecasted. IMO they handled it very, very, well. There was probably some head scratching over the fact so many dealers just grabbed the cars and put them in their secret storage i.e. "personal garage". So they were never reported sold. As for the markup, duh, dis is USA.

As Bony alluded to 4000 or so units in 2 years in the US at over 150k MSRP. I doubt that has ever been matched in the history of the car biz.

Chrysler is in big big trouble. Cerbeus got rocked by the wipsaw gas prices and the Ram sales plan is up in smoke. This is just the beginning of the trouble.

They are so over dealered in many area's. No brand anywhere in the world want's to buy that problem.
I don't see any out and they might not either, hence Fire sale of Viper, whats next, maybe Jeep.

Halo Cars, rare models, collector car stuff. These things are for the profitable times, right now, Ford, GM better make dam sure we can keep our volume.

The marketing problem is this,
until most 14-29 year olds see domestic brands as cool, sporty, fun, and dependable. We have major problems.

 

[RALPHIE]

4038 was a large production if you want to compare it to Ferrari or Lambo.

Ferrari is on target to build 6,500 cars in 2008.
Maserati will build 7,000 this year and hopes to build 12,000 in 2012. (Source: Motor Trend)

Corvette production runs between 10,000 and 20,000 per year - call it 15,000 average. In it's heyday, they sold 38,000 in '69, 46,500 in '76, 53,000 in '79 & 51,500 in '84. (Source: http://www.oddrob.com/corvetteStats.asp)

Vipers have been made at a rate of about 2,000 per year, with production starting in 1992.

Ford built the GT at a rate of about 2,000 per year for two years. I'd say that is quite low comparably.

 

[B O N Y]

No argument with your numbers... none.

Only one point, if Ford turned out those numbers like Ferrari or premium marques such as MBZ etc we the resale value of the Ford would tumble just like those brands.

The F Cars sell to an elite group of buyers who have proven loyalty to the their local dealers who even get an option to buy them back. The typical buyer pays a premium over window and tolerates the big hit when the new model comes out. What did a 360 sell for when new, and what can you pick them up for today?

In fact if and when Ford releases the replacement of the FGT expect to see an adjustment. There are many FGT's sitting in garages not being driven that will find themselves all of a sudden in the want ads.

 

[RALPHIE]

No disagreement here - actually I was shocked when I saw how great the Corvette production numbers were from the late '60's to the '80's. I just thought I'd look up what the production numbers were for the various cars. Plus, the F car numbers are spread over 3 or 4 models, and the Maserati over 2 or 3.

 

[PILOTJPW1]

Are those world wide production numbers?

I dont think 1/4 of those F-cars make it to the states. Do they?

Ferrari is on target to build 6,500 cars in 2008.
Maserati will build 7,000 this year and hopes to build 12,000 in 2012. (Source: Motor Trend)

Corvette production runs between 10,000 and 20,000 per year - call it 15,000 average. In it's heyday, they sold 38,000 in '69, 46,500 in '76, 53,000 in '79 & 51,500 in '84. (Source: http://www.oddrob.com/corvetteStats.asp)

Vipers have been made at a rate of about 2,000 per year, with production starting in 1992.

Ford built the GT at a rate of about 2,000 per year for two years. I'd say that is quite low comparably.

 

[BlackICE]

In fact if and when Ford releases the replacement of the FGT expect to see an adjustment. There are many FGT's sitting in garages not being driven that will find themselves all of a sudden in the want ads.

True, but the "if" is the key word. IMHO I don't think Ford will produce another GT class car for a long time, if ever. At least 7+ years would be my guess.