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Home Front Economy
GM and Chrysler 'in merger talks'
2008-10-11
US car giants General Motors and Chrysler are in talks about a possible merger, US media say. Reports say the talks have been going on for a month but details of the deal vary from a merger to an acquisition by GM of Chrysler.

GM is the leading manufacturer and Chrysler third after Ford. All have been suffering with a plunge in US sales to 15-year lows. Neither of the parties have made any direct official comment.

Sources told the Wall Street Journal that Cerberus Capital Management, which owns 80.1% of Chrysler had proposed trading its automotive operations to GM in return for GM's stake in the auto lender GMAC Financial Services. The New York Times's sources spoke of a merger that was a "50-50" possibility, although it could take weeks to finalise and had been stalled by the turmoil in the financial markets.

GM spokesman Tony Cervone said: "Without referencing this specific rumour, as we've often said, GM officials routinely discuss issues of mutual interest with other automakers."

Analysts have questioned Chrysler's position, given its reliance on North America for 90% of its revenue. Both companies have been hard hit by falling truck and SUV sales and are struggling to push through job cuts against union opposition. GM shares hit a 60-year low this week. It posted a second-quarter net loss of $15.5bn.

Separately, Reuters reports that Ford is planning to sell most of its 33.4% holding in Japan's Mazda.
Posted by:3dc

#21  If you merge the two, and rationalize production, you could end up with an auto manufacturer that could build all the light truck (pickup), SUV, and small car production for NA in Mexico, and large cars in Canada.

I would expect this is just a preliminary round. Would not be surprised to see Nissan fold NA production into GM (Chrysler has already taken the Titan business to Mexico) and Ford and Honda to talk.

When we emerge from this economic disaster, the Big 3 will be Toyota, GM/Chrysler/Nissan, and Honda/Ford.
Posted by: Skunky Glins 5***   2008-10-11 22:00  

#20  I have a 1996 Dodge 2500 Club Cab 4-wheel drive with a V-10. It's got 126K and runs like new. I also have a 1999 Cavalier with a 4cylinder that has 146K and gets 32 MPG on the highway. They are paid for. I have no reason to buy new.
Posted by: Deacon Blues   2008-10-11 19:47  

#19  On Thursday I picked up some other staff for a site visit. When they get in a nearly 5-yr old truck and say: "wow, this is nice", I feel good
Posted by: Frank G   2008-10-11 19:32  

#18  66K...warranty til 72K. Oil change every 3K, leather interior's like new, no recalls, dealer serviced at required mileages. Looks, runs like new - and no, I'm not selling it
Posted by: Frank G   2008-10-11 19:28  

#17  "They keep enticing me to buy a new one, but why would I?"

Because if Ford goes belly up you'll be stuck with a Toyota Tundra. With a newer model you'll at least postpone the inevitable.
How many miles you got on the F-150?
Posted by: L1011   2008-10-11 19:25  

#16  My 2004 Ford F150 is a beauty, everything I wanted and still great. They keep enticing me to buy a new one, but why would I? The days of buying new vehicles (like my Dad did) every couple years is over. They are too well made, too expensive when new (my fully loaded 4x4 Lariat Supercrew was close to $38K with extended warranty) . The San Diego Union had a Auto section article that noted Porsche Cayennes are selling well at $86K. If you had one, would you sell it at a huge depreciation to incur a ...what?....$96K purchase of a new one in a couple years?
Posted by: Frank G   2008-10-11 18:45  

#15  Yeccchhh. And the result would be a grotesque, flailing monster that would REALLY be "too big to fail."
Posted by: Ricky bin Ricardo (Abu Babaloo)   2008-10-11 18:13  

#14  Unfortunately, L1011, that's exactly what they will say when the plants start closing for good.

And it won't be sarcasm from them.
Posted by: Barbara Skolaut   2008-10-11 16:08  

#13  Yup, Bethlehem Steel is a classic example.
Posted by: lotp   2008-10-11 16:07  

#12  That's how my darling father-in-law ended up retired and pensionless after spending his life at Bethlehem Steel, first as a union man, then as a quality inspector (first line management -- all the responsibility with none of the benefits).
Posted by: trailing wife    2008-10-11 15:36  

#11  But Barbara don't you see?!? The most important part is that they didn't give in! They might be out of a job, but hey, they never gave in. /sarc
Posted by: L1011   2008-10-11 15:30  

#10  Maybe they need to look at changing their "basic contract," Steve.

Or the UAW idiots can keep whining for more and plants can start shutting down and they can be unemployed with the wonderful knowledge that if they did have UAW jobs, they'd make a lot more money than they're actually worth.

That warm fuzzy feeling of what might have been won't feed the baby or pay the mortgage, of course, but it's more important than compromising or taking a pay cut in order to keep your company afloat.

I know an engineer who recently was handed a $6,000/year pay CUT, and he's grateful. Grateful that he's still working (unlike the 15 other people in his company who were let go for lack of business). Can you see any union member having that attitude? They'd rather all be unemployed from "high-paying" jobs than be employed with medium-paying jobs.

Pfui.
Posted by: Barbara Skolaut   2008-10-11 14:18  

#9  Coming soon: the Chrysler Empirical

/.5MT
Posted by: Alaska Paul    2008-10-11 14:09  

#8  The Big Three can't escape the UAW no matter what state they're in. That's part of the 'basic contract'.
Posted by: Steve White   2008-10-11 12:57  

#7  Gonna miss Mopar. UNless GM and Ford move production to non-union states, like Tenn, they will lose out to Honda and others who are producing cars far outside Detroit and the union;s reach.

Time to abandon Michigan if they want their companies to survive. Look to Atlanta.
Posted by: OldSpook   2008-10-11 11:37  

#6  Just what GM needs. More production capacity to build cars people don't want with union thugs who are grossly overpaid. That'll work. And Cerberus may be able to pull it off.
Posted by: Nimble Spemble   2008-10-11 09:27  

#5  The Iococca Impala! New for 2010.

Has a very.... Kenyan ring to it. Very presidential. Very Home Boy.
Posted by: Besoeker   2008-10-11 09:20  

#4  They'll wind up with a Cadillac that rusts like a Chrysler Imperial. Augh!
Posted by: M. Murcek   2008-10-11 09:10  

#3  Burn the Hemi Sekrets!
Posted by: .5MT   2008-10-11 08:21  

#2  ...If this were to happen - and there would be some serious, though not insurmountable, antitrust questions - basically Chrysler would go away except for Jeep. Figure GMC, Pontiac and Buick would pretty much go too.

Mike
Posted by: Mike Kozlowski   2008-10-11 05:14  

#1  Good. It's about time one of these go away. We've had too many auto manufacturers for way too long. Though if I was GM, I wouldn't want anything to do with Chrysler and I'd be to concerned with how bad GMAC (owner of Ditech.com) is going to hurt me. Makes me a little sad. I'm a big fan of the older Mopars.

I'd let Chrysler all but fail completely before I'd buy it.

And no bailout possibilities for Chrysler either. No way a Bambi administration is going to bail out a venture capital group.

A lot of Mexicans are going to lose manufacturing jobs.
Posted by: Mike N.   2008-10-11 03:55  

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