What The....?

[fbachman]

General Motors and privately-held Chrysler, two of the most iconic names in American industry, are in preliminary talks about a possible merger, according to reports in The New York Times and The Wall Street Journal.

 

The possibility of the two struggling automakers merging would be a historic move in a time of a hurting economy and tight credit markets.

 

According to the Times, talks between GM (GM) and Chrysler began nearly a month ago and talks will continue for several more weeks if they progress at all. The newspaper, citing anonymous sources, said a merger between Chrysler and GM was “50/50” as of Friday evening.

 

Private equity firm Cerberus Capital Management owns Chrysler. Calls and e-mails into GM and Cerberus were not immediately returned.

 

The Journal reported that Cerberus proposed selling GM all of Chrysler's automotive operations, in exchange for GM selling Cerberus its remaining 49% stake in GMAC.

 

There are a multitude of logistical, legal and financial hurtles that a merger between two of Detroit’s Big Three would have to go through for a merger to make financial sense.

 

Labor unions for both companies would have to sign off on the merger, possibly similar to the recent mergers between major airlines. There also the dozens of car and truck factories scattered across the nation and the world that would have to be consolidated.

 

According to the Journal, GM believes they could save as much as $10 billion in costs with a merger with Chrysler.

 

GM’s stock fell to nearly a 60-year low this week after rating agency Standard & Poor’s said it was looking into downgrading GM’s long term debt rating. With the credit markets in such bad shape as they are, and GM’s debt rating poor already, a rating downgrade would be

[c4cruiser]

Didn't Daimler-Benz just dump Chrysler a year or so ago? The private company that bought Chrysler was supposed to "turn Chrysler around".

 

GM is in enough trouble as it is and I don't see what acquiring Chrysler will do to help their position. The good part of this deal would be for GM to drop GMAC and get out of the loan business. The part that could really hurt GM is having to deal with potential union issues when the Chrysler plants are acquired.

 

It might also turn out that the Chrysler plants are not in the best of shape and may need an influx of money to improve buildings and equipment. There could be a potential for closings, layoffs, extra pension funding, if some of the existing Chrysler plants would be closed.

 

It may be that the best thing to do would be to take Dodge and dump the rest including any foreign lines associated with Chrysler. The Dodge car and truck product lineup could make a go of it as a single marque if it was run properly. Jeep could be a part of that, but I would like to see the Chinese Jeep factory closed down. There is no reason why a US auto company can't import Jeep into Asian nations.

[satori]

Noooo! The first day they put a Dodge part on a Chevy is the day that Chevy is dead to me.

[2018GMC]

Very interesting. A quick google search brought up these links:

 

http://www.iht.com/articles/2008/10/11/business/auto.php

 

http://www.nytimes.com/2008/10/11/business...amp;oref=slogin

 

http://money.cnn.com/2008/10/11/news/compa...dex.htm?cnn=yes

 

General Motors' stock has fallen from more than $43 a share last year to less than $5, and it is burning through its cash hoard at a rapid rate. Chrysler, as a private company, no longer needs to report its finances.

 

If GM, the largest U.S. automaker, combined operations with Chrysler, the smallest of Detroit's Big Three, they would create an auto giant that would surpass Toyota, which recently has been battling GM for bragging rights as world's largest automaker.

the potential merger carries enormous risks. Both G.M. and Chrysler are struggling mightily in what is the worst market for vehicle sales in the United States in 15 years.

 

GM and Ford shares were battered with the rest of the stock market this week, falling to lows not seen in decades. GM (GM, Fortune 500) shares lost about half of their already-depressed value during the week, closing at $4.89 on Friday. Ford shares fell similarly, ending the week at $1.99.

 

GM said Friday, in response to the stock price, that it is nor considering a bankruptcy filing.

 

"Clearly we face unprecedented challenges related to uncertainties in the financial markets globally and weakening economic fundamentals in many key markets, but bankruptcy protection is not an option GM is considering," a company statement said

[Zembonez]

All I have to say about this is:

 

When drowning, you don't grab hold of the fat man next to you with an anvil tied to his foot...

[Paul58]

GM and Chrysler merge! There goes the neighborhood...

[Darkanion]

This would seem to fit with some GM's other bad decisions, though.... So, it'll probably happen........

 

[2000DV4.8]

I honestly can't say that I'm surprised. Them developing the two-mode hybrid system together seems to have been a bit of foreshadowing...

[D&SYukonDenali]

It seems the only way this would be a good idea (back seat CEO'ing here) is if they can gain economies of scale within GM's remaining plants. However, I highly doubt that the deal would not include all of Chrysler's existing asset base (including plants), and that GM would just be closing more than what they currently have on table.

 

Adding negative net income with negative net income does not equal positive net income.

 

Unless this is a political move to get bailed out by the government (the government probably won't allow no car manufacturers in the US, and bailing out two is better than three).

[Paul58]

I honestly can't say that I'm surprised. Them developing the two-mode hybrid system together seems to have been a bit of foreshadowing...

 

True, they also offer the variable enginge displacement. This might be good for both as it will probably drive Ford out of the business making them the Big One!

 

Speaking of Ford, there was an article in the paper this morning about Ford offering an SFE option on their 09 F-150s. They claim the SFE (Superior Fuel Economy) version will get 15 mpg city and 21 mpg highway! GM already offeres this with their XFE option, but do it with aerodynamic technology, weight reducing technology, and variable engine displacement on a 5.3L 320 HP V8! Ford did by swapping the 5.4L V8 with a smaller, anemic 4.6L and in the process killed any towing capability! So much for another one of Ford's better ideas! Technology wise, GM and Chrysler are way ahead of Ford!

[slomo007]

I can see their reasoning....take the Chrysler minivan and dump whatever Chevy has now. Take the Chrysler 300 and dump the Impala. That's about all Chrysler has going for it.

[2000DV4.8]

The new Chrysler minivans are positively the ugliest vehicle I have ever seen. F*cking EVER.

 

[D&SYukonDenali]

The new Chrysler minivans are positively the ugliest vehicle I have ever seen. F*cking EVER.

 

 

 

Try driving one. Avis gave me one a couple business trips ago; terrible. Inside was cheap and drove like crap.

[VMax2007]

Most posters here are heavily biased on GM & only think of the end product when these types of deals get discussed. This deal would have an impact much greater then end product. I own multiple brands & part of my income comes from investing so I try to look at things with an open mind. Don't look at the end product, but look how this will allow both companies to survive. Massive headcount reductions, shared patents, greater purchasing power is just a few of the things that will affect the bottom line right away. Long term development costs will be much cheaper. No need to R&D so many different engines, transmissions and other components for future models. Although many here will deny it, the American auto industry is in a fight for survival. Poor product mix, inefficient vehicles & perceived quality issues have made the shrinking customer base make choices other then purchasing an American based vehicle. GM can not afford another GMT-900 like disaster. (Sorry guys, when you get away from this GM fan based web site & look what the general public still wants to pay money for, it is not the GMT-900.)

 

 

I agree with the 1st part of your post, but regarding that last part.....

 

O'Rly? What do they prefer...the Tundra?

 

Top 10 Pickups Sales Figures

Year-to-Date (YTD) Sept. 2008

 

Ford F-Series

392,698 -26.9% YTD

September 2008: 32,727

September 2007: 56,065

 

Chevrolet Silverado

370,502 -22.5% YTD

September 2008: 50,428

September 2007: 52,480

 

Dodge Ram

196,058 -29.0% YTD

September 2008: 20,812

September 2007: 30,100

 

GMC Sierra

133,811 -14.9% YTD

September 2008: 18,744

September 2007: 18,445

 

Toyota Tacoma

117,313 -13.4% YTD

September 2008: 9,176

September 2007: 13,996

 

Toyota Tundra

115,026 -20.4% YTD

September 2008: 7,696

September 2007: 19,571

 

Ford Ranger

54,815 -4.6% YTD

September 2008: 3,915

September 2007: 4,019

 

Chevrolet Colorado

44,884 -24.2% YTD

September 2008: 3,359

September 2007: 5,598

 

Nissan Frontier

40,873 -19.4% YTD

September 2008: 1,534

September 2007: 5,480

 

Nissan Titan

29,900 -41.3% YTD

September 2008: 2,872

September 2007: 5,193

[2000DV4.8]

Most posters here are heavily biased on GM & only think of the end product when these types of deals get discussed. This deal would have an impact much greater then end product. I own multiple brands & part of my income comes from investing so I try to look at things with an open mind. Don't look at the end product, but look how this will allow both companies to survive. Massive headcount reductions, shared patents, greater purchasing power is just a few of the things that will affect the bottom line right away. Long term development costs will be much cheaper. No need to R&D so many different engines, transmissions and other components for future models. Although many here will deny it, the American auto industry is in a fight for survival. Poor product mix, inefficient vehicles & perceived quality issues have made the shrinking customer base make choices other then purchasing an American based vehicle. GM can not afford another GMT-900 like disaster. (Sorry guys, when you get away from this GM fan based web site & look what the general public still wants to pay money for, it is not the GMT-900.)

 

Or ANY truck for that matter, so the GMT900 platform isn't a 'disaster'. Or if it is, the new Tundra platform is a disaster, and the new Ford and Doge platforms will be just as big of a disaster.

 

We get it Won, you don't like you're truck (if you even f*cking have one), but we do, and you sure as hell aren't going to give anyone the epiphany you think you are, and make them sell their truck. Get a life, and stop trolling on internet sites, or maybe make some real contributions every now and then.