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Innovation from Hell: Private equity rips apart the automotive sector

For anyone interested in innovation within the automotive sector, I’d suggest keeping an eye on Cerberus Capital Management. (The private equity firm is named for the mythological three-headed dog that guards the gates of Hades and is known for its secretive, “take-no-prisoners” approach to investing) The private equity firm has already acquired an auto parts maker; two car rental companies (Alamo and National); a 51% stake in auto financing company GMAC; and a bus manufacturer. In addition, the firm is attempting to scoop up stakes in Tower Automotive and auto parts maker Delphi. Now, rumors are circulating that Cerberus is in the bidding for Chrysler. Knowing the hubris of these private equity guys, they’ll try to put Humpty Dumpty (i.e the U.S. auto sector) back together again.

Anyway, the Detroit Free Press has done a great job of shining some light on Cerberus’ possible intentions for the automotive sector. As it turns out, the firm is stuffed to the gills with former auto heavyweights and Gordon Gekko-like Wall Street investment bankers with automotive sector experience. Plus, former VP Dan Quayle is on the board of directors of Cerberus (come to think of it, maybe that’s a big negative…)

What do you think? Can private equity be a driving force for innovation within the automotive sector?

[image: Cerberus]


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