Apparently parent company DaimlerChrysler AG (DC) is so anxious to dump Chrysler (CC) that it has agreed to pay the buyer $1.55 billion to take over the ailing American auto giant. Last week we thought the Russians were coming. Now, we find out it's Wall Street blue suit types who look to be poised to take over at Chrysler.

The takeover deal requires the new owner, Cerberus Capital Management (CCM), to pony up more than $6 billion to beef up the bank account of the Chrysler operation, including its financing division, according to Reuters news. That's not to buy the corporation . . . that's just to make the accounting books look good.

To grease the skids on the deal, Daimler agreed to transfer $1.55 billion to the Chrysler bank accounts just so it can jump ship from its nine-year-old failed merger. They paid $36 billion to acquire Chrysler back in 1998.

In exchange, Cerberus Capital Management gets an 80.1 percent stake in a more solvent Chrysler business. Chrysler’s main union, the United Auto Workers, is cautiously giving a thumbs up to the proposal.

Chrysler Chief Executive Tom LaSorda said the deal would not trigger job cuts beyond the 13,000 the company announced in February, when it unveiled a $1.5 billion 2006 operating loss.

Reports are that out of Cerberus’ $7.4 billion commitment, $6.05 billion will be dumped into Chrysler — $5 billion into auto operations and $1.05 billion into its finance arm. Cerberus will also pay $1.35 billion to Daimler, which in turn is loaning $405 million to Chrysler.

DaimlerChrysler, a German company whose name will change to Daimler AG if shareholders approve, will contribute $880 million to cover long-term liabilities at Chrysler. It also agreed to transfer Chrysler’s Auto business free to debt, saying that would mean a net cash cost of $680 million from the sale.

Chrysler's brands, the Jeep and Dodge and Chrysler brand, will stay with Chrysler. The German company's premium brands, however, will stay with Daimler. That's Mercedes-Benz, the luxury Maybach and the Smart minicars.

Cerberus is a New York-based private investment fund that has become a big player in the hedge-fund business. Going back to a lesson learned a decade ago, they are reputed to have hired Wolfgang Bernhard to be an advisor on the deal. He's the guy who helped turn Chrysler around earlier this decade.

Okay, so DC pays money to get CCM to take over CC, and CCM pays DC most of that back, and then DC loans about a third of it back to CC. The whole thing sounds like a money mad merry go round dreamed up by lawyers and bankers who are probably getting paid a commission for creativity . . . but then again, that's what it sounded like nearly a decade ago when Daimler came on the scene in the first place.

So when you call up the 800 number for warranty help, I guess you'll get a blue suit that wants to sell you stock. The whole thing sounds like a shell game to me. If you get a lemon, and that's what it begins to sound like to you too, call us. We know what to do about it.

Burdge Law Office

www.UsLemonLawyers.com

Helping Consumers, and Consumer Law Attorneys, Since 1978

Chrysler ... bought by the Russians? Say it ain't so . . .

Magna International is a finalist in the buyout bidding for Chrysler and is already making plans on restructuring the lumbering auto giant. Now comes word that a company owned by Russian billionaire Oleg Deripaska will pay $1.54 billion for 20 million shares in Magna. Deripaska is reported to have political connections with Russian President Vladimir Putin but of course that's no surprise. Seems like Presidents of lots of countries have "political connections" with billionaires.

You think you've got trouble with warranty coverage now, just wait 'till the Russians are making the decisions! Nyet may be what you may be hearing on the 800 number sooner than you think!

Okay, so let me see if I've got this right. Americans sold Chrysler to the Germans and now the Germans are ready to sell it to an outfit made up of Russians and Canadians? What gives here?

Looks like Magna apparently wants to get some partners in on its Chrysler deal to spread the risk in case things turn out bad later on. One JP Morgan analyst, Himanshu Patel, predicted that the proposed structure of the deal could allow Stronach and Deripaska to buy Chrysler through a holding company, which would allow Magna's main auto parts business to keep selling to other auto companies while Magna looks to make a profit off its partial Chrysler ownership.

Big business looks to buy big car companies so it can make big lemons that we're all stuck with. There's something rotten in Denmark.

Oh, wait a minute, they aren't in the deal . . . yet.

It's deja vu all over again, says Yogi.

At the New York auto show in 1995, billionaire Kirk Kerkorian (#53 of the world's richest people, according to Forbes in 2006) announced that he would make a $20 Billion dollar bid to buy Chyrsler Corporation. That didn't happen.

A few years later the folks who brought you the Mercedes Benz came along with a bigger checkbook ($36 Billion worth) and they bought Chrysler out, changing the name to DaimlerChyrsler Corporation. The Germans promptly ran Chrysler right into the ground, tossing long term employees out the front door, whittling away at quality, increasing prices, etc. Basically they did just about everything necessary to gut the company of its true value.

Now, Kerkorian is back again, knocking on Chrysler's door. Well, actually the door says DaimlerChrysler on it now, but that may not be for long. At least 3 companies (or conglomerates) are publicly talking about buying Chrysler from its German owners now.

And Kerkorian? You just can't keep a good man (or, to be more precise, a rich man) down.

Just like in 1995, here comes Kerkorian again at the New York auto show announcing that he'll make another bid to buy Chrysler --- but this time he's only offering $4 1/2 Billion. If nothing else, Kerkorian apparently knows a good deal when he sees one and maybe he can turn this limping giant around and make it the company that Chrysler was "once upon a time". At least with him, the company is back in American control again. That alone is a step in the right direction.

A few weeks ago we reported that GM was talking with DaimlerChrysler about buying the ailing Chrysler US operation. Turns out they were not only talking, they actually made a low ball bid.

GM offered to take over Chrysler in exchange for a small amount of GM stock and DaimlerChyrsler paying GM money to take on Chrysler's $16 Billion health care liability. Sounds like GM made a low ball bid in order to set itself up for later negotiations. If so, that time may be coming.

DaimlerChrysler is saying they want the Chrysler bids in hand before the next stockholder meeting on April 4 and a sale set up by September. With that kind of timetable, the bidders are circling like wolves around a crippled calf, just licking their chomps.

Possible buyers have been identified as Cerberus Capital Management or the Blackstone Group or Canadian supplier Magna International. All three are reported to be talking to union reps, probably asking for pay cuts, and Magna is reported to have put out the best bid so far.

Once again, you just don't know where the dust will settle in Detroit. And once again, the uncertainty of Chrysler has people saying that this is no time to buy a new Chrysler unless you can get it at one heck of a price.

That's a shame too because a thousands of ordinary people depend on Chrysler for their survival. The bigger shame is that when the Germans staged their $36 Billion buying coup in 1998, it was the blue suits in the boardroom that let them buy it out ... and who made out like a bandit? Why, those same blue suits, of course.

When Daimler took over, everyday Americans in Detroit lost their jobs, the boardroom bandits grabbed their money (lots of it) and ran, and now DaimlerChrysler's "American experiment" has come full circle. The problem is, foreigners are still the ones who are looking at picking up the pieces.

When will Congress change the laws to stop this sort of corporate shenanigans? When people start making their voices heard in Washington louder than the sound of silver dollars being tossed at the politicians in their fundraisers.

These days, maybe what we need is a Lemon Law that covers politicians.

Click here to write your congressman and complain. Let them know you’re watching what they are NOT doing. Politicians don’t like that and maybe that’ll keep them honest.

Unions aren't happy with rumors of big money moguls buying Chrysler from DaimlerChrysler AG and that just may foul up the investor group's plans, according to Reuster news reports.

The unions' opposition comes just as Cerberus Capital Management company officials are piecing together a takeover team but both US and European labor unions are voicing strong concerns about job security amid distrust of feared large job cuts if the Cerberus group pulls off its bid to buy the Chrysler's U.S. unit. Meanwhile, industry people are tossing out some decent ideas on how to fix Chrysler and its lagging product line, if only someone in the paneled corporate hallways of Detroit would listen...

Cerberus is made up of private investment groups Blackstone Group and Centerbridge Partners LP, and Canadian supplier Magna International Inc. Reports are that they have already met with Chrysler executives and begun reviewing financial and product-development information. They are expected to present their purchase proposals by month's end.

Certainly someone needs to buy the once-proud and now-ailing auto giant before it falls into a deep economic sleep from which it can't recover...and it seems clear that its European corporate parent is about to kick this corporate stepchild out on the streets!

What'll it mean for the drivers of Chrysler products? Who knows? The new owner likely will have to do what Chrysler's corporate parent wouldn't, or couldn't, including slashing the work force, stalling improvements behind closed doors, and more cost-cutting measures, not the least of which is (just as the Unions fear) cutting wages for the people it keeps on board. There's lots of reasons to fear, if you work for Chrysler in the US. And there's lots of reason for concern if you're going out to buy a new car too.

After all, if that shiny new Chrysler 300 has fiery seats, like the recalled 2006 Chrysler 300 cars, will Dr. Z on a beach somewhere, enjoying his bonus money while you're calling the fire department?

DaimlerChrysler looks to be facing tough times and tough troubles.

Recently the company announced that it had immediately suspended some senior managers after a probe uncovered what it calls "unspecified irregularities" (corporate speak for "we aren't gonna tell you how bad it is").

The company is already under investigation by the US Securities and Exchange Commission over allegations that it used slush funds to bribe foreign officials, as US financial regulators and criminal investigators continue looking into potential violations of anit-corruption laws because of payments the company has said deal primarily with transaction involving government entities in Africa, Asia and eastern Europe.

On top of that, the Chrysler group last month posted a $1.46 billion (with a "B") loss for the third quarter. Luckily, the Mercedes and Truck divisions are making up for it.

Meanwhile, rumors continue to float that the Chrysler group may be for sale. When asked, its Chief Financial Officer Uebber said "We don't exclude anything here," including structural changes as the company aims to improve its profit margins by a publicly announced $1,000 per vehicle.

Even at that, however, it's doing a lot better than GM and Ford, which are projected to be losing $1,271 and $451 respectively for each vehicle sold in the US while Chrysler squeezes out a narrow profit of $144. Even at that, all three are miles behind Nissan's $2,135 profit per vehicle Toyota's profit of $1,715 per vehicle and Honda's $1,259.

If you're in the market for a new car, the manufacturer's financial stability is something you might want to consider. When companies pinch pennies, quality control can be the first thing to go out the window. When that happens, the lemons start popping. If you get one, call or email or fax us.

Yesterday we talked about the numbers games that got bankrupt Delphi in hot water (and litigation) with the SEC. Today, we see that Chrysler is also up to some number games of its own.

WardsAuto.com is reporting that unlike other manufacturers, Chrysler has been building cars its dealers don't need and can't sell, and piling up a 100,000 vehicle backlog of unsold vehicles (parked out back?) that it just forgot to count as unsold inventory.

Of course, doing that made their public numbers look a lot better than they really were. Some say that little-used accounting practice disguised Chrysler's overall market picture at a time when it was really bleaker than the industry thought.

Now, we learn that at the end of September Chrysler's reported inventory neared 529,000 vehicles. With that glut, which some dealers don't like having to live with, now may be a good time to bargain yourself into a good deal ... or not.

In its defense, Chrysler says it's a common practice but Ford's George Pipas reportedly scoffed at the notion, saying "Absolutely false." The American Honda and Nissan officials also are reported to have said the same thing. Meanwhile, Chrysler says its practice keeps the factories "humming" at a time when the third quarter loss was reported at a staggering $1.5 billion. At that rate the corporate giant could end up humming its way into a one man band in an empty auditorium and falling flat on its face to boot.

Now, rumor has it that Mercedes has shipped in executives under a program called "Project ReFocus" and whose aim is to cut costs and improve efficiency. As they said once before on the streets in Detroit, here come the Germans again!

It doesn't take a German rocket scientist to figure out that it's stupid to build 529,000 cars that aren't being sold. Apparently someone keeps replaying that line from the movie Field of Dreams... "if you build it they will come."

Fruit, like new cars, can't sit on the shelf too long or things can begin to go wrong. After all, fresh lemons can turn sour and rancid with too much age. Thank goodness we have a Lemon Law that's ready for the day when Chrysler ships all those cars out of its back "Field of Dreams."

It's about time.

Warranties are about confidence. They are the manufacturer's way of proving to the customer that they built it right and they'll stand behind it if something goes wrong. When you think about the price of a new car or truck nowadays, that's only fair.

In the 1980's Hyundai was the laugh of the auto industry with cheap cars and lousy quality. It was so bad they almost pulled out of the US market. Then they upped the quality but Hyundai also realized that quality alone wouldn't get them invited into the American buyer's garage, so they backed their vehicles up with a 10 year - 100,000 mile powertrain warranty. The result? It took a little time, but buyer's bought and other manufacturer's took notice as their market share started to erode.

Now GM has joined the warranty stretch game. In July Ford increased its powertrain warranty to 5 years - 60,000 miles, in an effort to boost consumer confidence and take market share. It was only a matter of time before GM had to go them one better.

On Sept 7 GM announced that all new 2007 model year vehicles future sales (in all 8 GM lines) would come with a 5 year - 1000,000 mile power train warranty. That's a logical step if GM wants to boost confidence in their product lines again. Just matching Ford would only make GM look like "Johnny come lately" to the warranty party. They had to go one better.

What is curious in all this is DaimlerChrysler. Where are they?

Years ago they were the first Big 3 company to give a longer powertrain warranty, 7 years - 100,000 miles. In their zeal to cut costs everywhere they could, no doubt, they cut the warranty too, eventually all the way back to 3 years - 36,000 miles. Now it's time for them to play catch up, and they probably will.

So if you are bound and determined to buy a new Chrysler, we suggest you wait it out. Sooner or later Chrysler will have to match (or beat) the longer warranty coverage everybody else seems to be offering. Why? Because they know that smart buyers always take reliability over style and a longer warranty promises better reliability.

After all, nobody wants a great looking car that is just another lemon. To find out more about the Lemon Law in your state, click here.