Cerberus Capital Management is offering up its entire share in beleaguered automaker Chrysler in order to allow the automaker to secure its $4 billion portion of the low-interest federal loan granted late last week by the Bush Administration. Cerberus is apparently seeking to focus primarily on the automotive lending market with Chrysler Financial and GMAC.

Automotive News says that the private equity firm is offering up its entire stake in Chrysler to “make the accommodations necessary to affect [Chrysler's] restructuring.”

“They’re effectively offering up the automotive side of the operation,” Lars Luedeman, head of auto analysis for Grant Thornton in Southfield, Michigan, told the publication. “Cerberus is really focusing on the lending side of the automobile industry.”

Cerberus owns a stake in GMAC and Chrysler Financial.

Under the loan announced by means of President George W. Bush, Chrysler be necessitated to swap equity for debt to reduce its debt load and to fund about half of its obligations to the UAW’s Voluntary Employee Beneficiary Association trust with stock.

Chrysler Financial will offer $2 billion in order to backstop the government’s loan, which must be repaid by March 30.

“It’s a cooperative way of handing over your position in a company to help it see another day. It’s an industry-supportive move by Cerberus, which is more beneficial to the other OEMs,” Kimberly Rodriguez, also with Grant Thornton, told the publication.

Analysts have said that Chrysler’s future lies in partnerships with other automakers. It currently works with Volkswagen and Nissan, yet it will almost certainly need to expand those partnerships and seek others in order to stay afloat.

Source: www.leftlanenews.com

As anticipated late last week, Toyota on Monday forecast an operating defeat of $1.66 billion for the fiscal year ending March 2009. The announcement was made by the automaker’s president, Katsuaki Watanabe, at the company’s annual year-end press conference in Nagoya, Japan. The loss would be the automaker’s first since loss it began reporting results in 1941.

It goes without saying that Toyota blamed the sluggish credit market for its slow sales across the globe.

“The change that has happy stroke the world economy is of a critical scale that comes once in a hundred years,” Watanabe said. He called the drop in sales over the last month “far faster, wider and deeper than expected.”

Watanabe indicated that Toyota’s net profit expectation would drop from 1.7 trillion yen - about $19 billion - to just $558 million.

Last fiscal year, Toyota posted an operating profit of about $25 billion. This is the second time that Toyota has dropped its earnings forecast this year.

Tsuyoshi Mochimaru, auto analyst for Barclays Capital in Tokyo, told the Associated Press that Toyota will continue to struggle into the near future.

“The problem is next year,” he said, while adding that the latest revisions were within expectations. “It’s unmistakable that things are extremely tough by reason of Toyota.”

Watanabe said that Toyota plans to tarry lean as its sales drop in order to maintain profitability, though he said at the press conference that the automaker’s bottom line on this account that sales is 7 million units worldwide. In 2007, Toyota sold 9.37 million vehicles and it will announce global 2008 sales results shortly after the new year begins.

Source: www.leftlanenews.com

As Toyota attempts to tighten its belt in response to dwindling sales, the automaker announced that it has suspended its joint venture with Isuzu to produce a small diesel powertrain. Toyota had acquired a stake in Isuzu in 2006 primarily for the automaker’s diesel expertise. The joint-venture powertrain was set to appear in European Toyotas in 2012.

“A decision was made early this month to suspend the project,” a Toyota spokesman told Reuters, citing slumping sales.

The engine was said to be a 1.6-liter diesel and it was expected to be featured in a variety of Toyota vehicles in Europe with North American sales a possibility in the future. Toyota was said to be watching the North American diesel market closely and evaluating whether to import the engine at a later date.

Toyota is said to be reviewing all products in the pipeline as it looks for ways to divide costs.

Source: www.leftlanenews.com