Wednesday, 27 June 2007
Chrysler buyer Cerberus opposing federal fuel economy legislation
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Late last week the United States Senate voted in favor of increasing fuel economy standards by approximately 40 percent, to 35 mpg for both cars and trucks, by the year 2020. The decision now goes to the House of Representatives for review, but many analysts consider the Senate vote a bitter defeat for automakers. Cleary some manufacturers will be better equipped to deal with the 35-mpg standard than others, but every carmaker will require some fundamental shift in philosophy to meet the mark.
Chrysler may be among the automakers facing the most difficult challenge, since about 70 percent of the Group’s sales are comprised of trucks, minivans and SUVs. The car companies had lobbied for lower gas mileage standards for trucks and SUVs at a later date, but to no avail.
Chrysler is also unique in that the Group (Chrysler/Dodge/Jeep) has just been sold by Daimler to Cerberus Capital Management, a private-equity firm. The sale has not yet been completed, but could happen as soon as next month. Accordingly, executives from Cerberus have been adamantly opposing the fuel economy legislation in Washington, realizing that such legislation could potentially cripple any potential money making opportunities relying on current Chrysler product. Stephen Feinberg, CEO of Cerberus, told Senators that the proposed fuel economy increase would add approximately $7,000 in costs per vehicle. Current Chrysler lobbyists and spokespeople have not joined Feinburg and Cerberus directly, as the sale has not yet been completed.
Source: The Detroit News
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