Chrysler Considers Sale of Gas-Guzzling Dodge Viper

by: Money Morning August 28, 2008 | about stocks: DAI / F / GM / HMC / TM    

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by Jennifer Yousfi

With the U.S. auto market increasingly focused on practicality and fuel-efficiency, Chrysler LLC announced Wednesday it was entertaining offers for its Dodge Viper sports car.

"We have been approached by third parties who are interested in exploring future possibilities for Viper," Chief Executive Bob Nardelli said in a memo to employees, Reuters reported.

"As [Chrysler] evaluates strategic options to maximize core operations and leverage its assets, we have agreed to listen to these parties," he added.

The Dodge Viper, one of Chrysler’s flashiest models, is a 600-horsepower sports car with a starting price of around $90,000. Its V10 engine gets a dismal 13 miles per gallon in the city at a time when cost-conscious consumers are trying to avoid high prices at the pumps.

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

Interested parties could include custom-vehicle builders such as Panoz Auto Development Co. or Shelby Automobiles Inc., both of whom would be logical buyers, Gillette said.

Chrysler is the third-largest U.S. automaker behind rivals General Motors Corp. (GM) and Ford Motor Co. (F). All three have been struggling to adapt to changing consumer preferences, as soaring oil prices shift the focus away from larger models of pick-ups and sport-utility vehicles.

Chrysler has released limited information since its purchase from Daimler AG (DAI) by private equity firm Cerberus Capital Management LP. But with 90% of its sales coming from the hard-hit U.S. market, its safe to assume Chrysler has suffered worse than its more internationally focused competitors.

U.S. automakers were late to adapt to changing industry dynamics as demand for smaller, more fuel-efficient cars has grown. Foreign rivals Toyota Motor Corp. (TM) and Honda Motor Co. Ltd. (HMC) have been quicker to market with gas-sipping hybrid models such as Toyota’s Prius that have proven popular with U.S. consumers sick of frequent stops at high-priced gas stations.

Being at the leading edge of hybrid technology helped boost Toyota into the top spot as the world’s leading auto manufacturer, supplanting longtime leader General Motors.

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This article has 7 comments:

  •  
    Aug 28 10:21 AM
    I've driven the Viper. Sure it's fast, but it is a totally unbalanced car. Traction is awful. Who cares if you have 600HP if it's useless because you can't get traction. Handling is mediocre at best and the cabin is uncomfortable. For this kind of money, the Vette or M3 are much better choices. Chrysler is dead. They just don't know it yet.
    Reply | Link to Comment
  •  
    Aug 28 11:19 AM
    Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling Gas-Guzzling

    Is that all you morons can say? It's a 600 hp weekend toy! It's not a commuter car.
    Reply | Link to Comment
  •  
    Aug 28 03:04 PM
    It's interesting they don't try to turn it into a hybrid or pure electric. Yes, it is awful at weight distribution and just a big, heavy muscle car but with batteries carefully placed and putting a 400hp electric engine in it, they could give themselves a brand new face and a new lease on an eco-friendly future.
    Reply | Link to Comment
  •  
    Aug 28 08:21 PM
    the viper is a special interest car with a select and limited audience.
    It is a strong halo brand for Chrysler that benefits them in many ways.
    The fact that it does or doesn't make money should be besides the point.
    Any costs of the brand should be allocated to promotion/advertising.

    Very short sighted to dump this I think. And it doesn't give good gas mileage??? Nobody cares because thats not what its about.

    Chrysler already has dumped the Magnum which is nearly identical to the 300 sedan except for some sheet metal changes. This was the lowest cost rear wheel drive wagon in the world...another big mistake.

    Thats what happens when you let narrow viewed bean counters determine outcomes instead of taking a larger global view of the company and its long term objectives.
    Reply | Link to Comment
  •  
    Aug 29 07:16 AM
    I've owned a Viper for 12 years, 90,000 miles, and get 22 MPG highway. At 65 MPH and 6th gear, then engine is only 1300 RPM. Sure, "spirited" driving is worse, but then it's not simply transportation, the ride itself is my fun. I happily pay a few dollars more per trip to arrive at work with a smile.
    Reply | Link to Comment
  •  
    Aug 29 12:55 PM
    Who would buy Viper now, when they can wait until Chrysler goes BK in a few months and buy it then for pennies on the dollar?
    Reply | Link to Comment
  •  
    Sep 02 10:31 AM
    Well let's see... Nardelli spent years ripping off Home Depot and running it almost into the ground. Hey, let's hire him to turn around a car company! Nardelli is a perfect example of the "old boy's club" in action. It should be a crime, if it isn't.
    Reply | Link to Comment
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