The Financial Times recently reported that Cerberus Capital Management (a private equity firm whose major investment is Chrysler LLC) sold more than half of its stake in Chrysler and GMAC to approximately 90 investors for around $1 billion. According to the article,

By selling equity to others soon after winning control of the two companies, Cerberus reduced its risks and earned fees from investors, who paid as much as $1bn for stakes in one or both of the companies. However, even with the sales, the fate of both companies remains crucially important for Cerberus, which has $27bn under management.

It is no surprise nor shock to find out that Chrysler LLC (one of the largest manufacturers of Sports Utility Vehicles) has had to put the brakes on recently due to the gas crisis. Let’s face it; no one wants to buy an SUV, and it’s showing in the statistics which tell us the same thing. Sales of SUVs are down more than any other year. Additionally, it seems that there are less people who are even looking to purchase SUVs because it is simply not cost-efficient. Investment firms like Cerberus may be in more trouble if they companies like Chrysler continue to cut back on production and lose customers.

What do you think about the situation? Do you think that companies such as Chrysler will eventually be forced to stop marketing SUVs?

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Tags: Auto News //