Will Navistar buy Jeep?

Before I can be accused of pulling a Leinert, the answer is “probably not.”

Jeep would be hard to pull away from Chrysler without one or the other being seriously wounded, but it’s not impossible. The Nitro would be dropped, the next-generation Durango either dropped or licensed or somehow dealt with, the engines licensed until Jeep could buy something new. Engineers could be reassigned or computer files sent over to other engineers who could spend some time trying to figure everything out. It wouldn’t be ideal, it wouldn’t necessarily make sense, but it could happen.

On the other hand, does Navistar actually have the money to make it happen? And is Jeep worth that much in its current state?

Plenty of other companies have 4×4 cred now. Toyota, Ford, and Mahindra have all made names for themselves, Toyota and Mahindra through actual street machines, and Ford through marketing and sponsorships. Just having off-road cred isn’t enough anyway; Hummer is being sold off and presumably could out-Jeep Jeep.

Based on the numbers, any buyer for Jeep would have to put a few hundred million into the acquisition itself, a few hundred million into bringing products to market, and then provide something to the creditors. Does Navistar even have the money?

Navistar had a gross profit for 2007, 2008 ($2.8 billion), and Q1 2009 ($647 million). Their net loss in 2007 was $120 million; in 2008 they made $134 million; in Q1 2009 they made $234 million. Still, their total liabilities were, in January, $11 billion, with $9.6 billion in assets.  They are losing cash, and I don’t figure this will be a good year for them. (Q1 2009 for them ended January 2009 so it doesn’t fully reflect current events, but net change in cash was -$364 million.) This year has been bad for the commercial-truck market; Sterling was shut down and the company formerly known as Freightliner has experienced the revenge of Daimler.

I don’t see Navistar as being able to keep Jeep going as a mass market company anyway. Perhaps they could keep it running like Kaiser or even AMC did, but the cost of playing the game has shot up dramatically and they have real competitors now. They just aren’t big enough and they don’t really have the kind of assets needed for the typical Jeeps: gas-powered Wranglers, Libertys, and Grand Cherokees. The enthusiasts would buy diesel Wranglers, but how many are there? Really? Compared with the hordes who used to buy Libertys, Cherokees, and Grand Cherokees?

As for other Jeep buyers, I don’t see any. Mahindra isn’t sized to buy Jeep, and has already turned it down; Toyota is but has no need for it, and doesn’t usually buy other companies (especially non-Japanese companies). Ford could use it but has no cash; ditto GM which can’t even keep its Pontiac brand alive, or hold onto Opel. Honda and BMW both have leaders who are smart enough to know what they do well, and stick to it. Who is left that has money? Only the Chinese brands, and apparently they’ve already turned down Jeep (though, apparently, not Hummer.)

Time will tell; strange things have indeed happened, and the public statements from some of the parties have been shown to be unreliable. But Navistar… I would not bet on it.

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The 2009 models and the Hemi horsepower conundrum

As you may already know from reading the forums announcement, the news page, and the home page, we’ve updated our coverage of the 2009 models.

What you may not know is that we’ve just finally updated every individual Chrysler, Dodge, and Jeep model that had 2009 changes, so those are all in sync.

You may have noticed that the Hemi engine has wildly varying horsepower figures. There’s all sorts of speculation on why that may be. Here are some leading contenders:

• Chrysler PR people got a bunch of numbers mixed up. That’s supported by the Durango/Aspen press release which reports 356 and 365 horsepower – twice for both numbers.
• The engines are carefully tuned for the application, in some cases to get better gas mileage, in others to get more peak horsepower.
• The engines and their accessories can have different levels of efficiency and tuning, but the more horsepower they achieve, the more it costs. Therefore, power has been matched to the marketing and financial needs. The Ram, for example, had to be very close to Toyota’s 5.7 liter engines.
• The Hemi needs to breath well, and can’t do it in every vehicle. The Ram has a bigger underhood area and so gets the most power. The Challenger was designed around the layout of the engine and gets the second best power, etc. (Remember, we’re still just speculating.)
• The engine power is matched to the components and handling capabilities of the vehicle. Since it’s very heavy, the Ram can get more power without needing to upgrade numerous suspension parts, with various financial and gas-mileage costs; it also has a heavy duty axle for capacity reasons and doesn’t need an expensive axle upgrade to handle more power.
• Power ratings on the Ram were announced before gas mileage became an issue. Other applications of the new VCT Hemi were tuned for gas mileage, but the Ram number was “locked in.”
• In the case of the Ram 2500 and 3500, power is limited to increase durability.
• Chrysler is playing with our heads to see what kind of crazy theories we come up with. Really, the engines are all the same.
• After announcing the Ram 1500′s power rating, the engineers discovered that they could come up with a more satisfying, flatter torque curve by sacrificing some peak horsepower. Again, the Ram 1500 was locked in – they had already announced the number to the press.

You can speculate and guess along with us – the only people who really know are in the basement and executive towers of the Mall of the Pentastar, otherwise known as the Chrysler Technical Center.