Festive mood at Chrysler fades fast

Chrysler and Cerberus Capital Management won't be formally joined until at least next week, but it's already clear that their union won't begin with a relaxing honeymoon.

Can it be only two months since Cerberus Chairman John Snow and Chrysler Chief Executive Officer Tom LaSorda gave us their best Louis Armstrong impressions, warbling about what a wonderful world it will be for Chrysler under the nurturing wing of private ownership? But look what's happening now:

• Wall Street balked Wednesday at buying a $12-billion debt offering Chrysler was trying to peddle to raise cash, even after delaying the offering a week as Chrysler's banks tried to find takers for the debt.

• Chrysler has banned more than 450 of its dealers from attending factory auctions of used cars because those dealers were falling way short of new-car sales targets set by the company, according to Automotive News.

• And Chrysler has acknowledged sending letters to dozens of poor-performing dealers, threatening to force them out of business. Leo Jerome, a Chrysler Jeep dealer in Lansing, told the Free Press on Wednesday that he has been given six months to improve sales or face losing his franchise.

None of these problems are expected to impede or delay the closing of the deal for Cerberus, the New York private-equity firm, to buy 80.1% of Chrysler from DaimlerChrysler AG, Chrysler officials insist.

But they illustrate how rocky the road ahead remains for the Auburn Hills automaker, no matter how strong the commitment or how deep the pockets of its new owner. More at Detroit Free Press