The Auto Writer

Chrysler's minivan dominance and Jeep brand have bolstered the company, but quality is a huge concern. Daimler's recent valuation of Chrysler -- zero -- isn't helping matters, making a sale of the beleaguered automaker a difficult proposition in an awful market.

How’s this for a Friday morning pick me up: Daimler AG, the one time owner of Chrysler, says that Chrysler is now worthless. At least that is how the company valued its 19.9% share in the automaker when it depreciated its value to zero for the quarter ending June 30, 2008.

From Out of the Daimler Fold

Chrysler was once part of the DaimlerChrysler fold, a textbook example of perhaps the worst “merger” in world history. Back in 1998, Daimler paid $37 billion for the automaker but was never able to fully incorporate the company into its fold. Last year, Daimler sold 80.1% of the company to Cerberus Capital Management L.P. for just $7.4 billion with most of that money covering the cost of Chrysler operations and providing funding for the company’s struggling financing arm.

Two months ago, Daimler expressed interest in selling off its remaining share, approaching Cerberus to make the purchase. Though their share is in effect “worthless” you have to think that Daimler will want at least a few hundred million dollars for Chrysler in a bid to appease shareholders. Daimler’s shareholders must be livid at having seen tens of billions of dollars squandered on Chrysler, a “merger of equals” that was anything but that.

In Talks To Move Chrysler

Cerberus wants to rid itself of Chrysler and is currently in talks with General Motors and Nissan-Renault to do just that.  But, results tabulated from a recent customer survey conducted by Consumer Reports shows that Chrysler has other problems to contend with, namely quality. As usual, the consumer advocate organization lavished praise on a number of different Japanese makes, but they included Ford in that mix too.

General Motors fared so-so, but Chrysler was criticized for their quality, considered to be about the worst in the industry. This report coupled with Daimler’s valuation of Chrysler could put a damper on anyone purchasing the automaker, a one-two punch that may finally lead to Chrysler’s demise.

(Source: Detroit Free Press)