When will the madness end? GM's talks to buy Chrysler heat up
We were all ready to start this week anew, leaving behind the reports of a supposed sale of Chrysler to General Motors. But alas, that ain't going to happen.Both the Detroit News and Automotive News came out with stories this morning making it clear that talks between the two automakers are serious and have been going on for some time.
The initial reports about GM sharing its GMT900 truck platform may or may not have been true, but according to Autonews, what's being discussed would go well beyond simply exchanging some engineering for cash.
The high-level talks have been taking place over the course of the past two months, beginning in December, with Rick Wagoner, GM's chairman sitting down with Dr. Z from DCX. The two automaker's CFOs have met on at least four separate occasions to discuss the buyout/merger/absorption, but naturally, both companies have declined to comment.
The Detroit News had some particularly interesting tidbits, including the idea that if GM were to purchase Chrysler, it would no longer exist as a company unto itself. All of Chrysler's brands and products would just become part of GM's overall organization. As an example, Jeep, one of DCX's most valuable brands, might be partnered with HUMMER as the General's off-road arm.
The risk versus reward for GM is tipped further towards disaster than success, with massive cannibalization of products, excessive debt, mismanaged product lines (within both automakers) and we haven't even gotten into the UAW and the catastrophic amount of layoffs that
Since we can't encapsulate every morsel of information here, we'd encourage you to read through the Detroit News piece and, if you have a subscription, check out the Automotive News article on the same topic.
[Sources: Detroit News, Automotive News – Sub. Req.]
Reader Comments (Page 1 of 2)
NoNameDenton 3:51AM (2/19/2007)
I still do not think that GM has the time or money to fix Chrysler, I would put more into the Koreans or maybe the Italians buying the company, though the best scenario would be if they became independent of the Germans and showed what they could do without Daimler
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iQuack 4:29AM (2/19/2007)
GM would be nuts to buy Chrysler. Would do little more than add brands to a company that has too many brands already and too many overlapping models as well.
Think massive badge engineering if this happens.
Do we really need a Dodge/Pontiac?
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Jim 4:39AM (2/19/2007)
If this happens, I have bought my last Chrysler product.
As a Mopar fan, GM must understand that Mopar fans will not by products made by GM...
Let Chrysler be independant or die...
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JasonSK 4:54AM (2/19/2007)
I dont understand, period, like..... how does this solve anything?
Everybody views domestics as bloated mas produced crap, how does making a BIGGER company solve that?
Man.. all this is going to do is make it easier for the uneducated IDIOTS who buy imports to insult domestics, one less company for their little minds to remember.
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doug 5:07AM (2/19/2007)
Is the pressure to be #1 in worldwide sales that great??? GM gets nothing from Chrysler except a weakened Jeep and the minivans, everything else is crap (you don't think they would get to keep the 300c chassis do you?).
From DCXs point of view, they need to sell the whole deal to unload all the healthcare and pension liabilities. But what company in their right mind would want to sign up for all that? If DCX was smart, they'd spin off Chrysler, give it a parting gift cash donation, and run like hell. If GM was smart, they'd wait for the cash to be gone, and pick up the pieces like they did with Daewoo.
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whofan 5:52AM (2/19/2007)
This may give GM more market share if they can sway Chrysler customers (true Americans) to be GM customers. The plan will for now keep yet another competitor out of the US market.
I would much rather see Chrysler become American owned as opposed to being a Chinese company.
Have we no national pride anymore?
The risk are great but the alternative is worse.
The best thing would be for Chrysler to become an independent American owned company.
I don`t see that as a possibilty after Diamler sucked them dry.
We need a national health care system if we are to survive in a global economy.
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NoNameDenton 5:57AM (2/19/2007)
Whofan, national healthcare is a Socialist idea that takes tax payers money, you really want to pay more taxes for it, be my guest, but I don't
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m0nster 8:38AM (2/20/2007)
Buying Chrysler would boost its volumes and revenues significantly, and ensure that GM remained ahead of Toyota Motor Corp. as the world's biggest automaker. In the process, Chrysler's management structure would be eliminated and much of its staff functions taken over by GM.
GM would add the Chrysler, Dodge and Jeep brands to its corporate lineup, and save money by spreading engineering and vehicle development costs over a larger and broader range of products.
Together, GM and Chrysler accounted for 11.8 million vehicles sold in 2006. Their combined U.S. market share would exceed 35 percent. And their status as American icons would make a combination of the two a historic event in the history of the U.S. auto industry
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potent 6:57AM (2/19/2007)
Well, the Ford Apache scenario looks like it might be continuing as the gang who couldn't shoot straight hunker down and re-trench as the
battle of Little Big Horn continues quietly in boardrooms.
The de-valuation of Chrysler brands and products in the last few years is going to be classic text book stuff of a company taking the easy way
out rather than staying within their strength - and the Germans did this no less - but then again, look at how Mercedes has been de-valued by the same corporate people and it should be no
surprise.
Jeep, the once dominant brand has gotten commoditized quickly though it's the jewel they have to negotiate with. New Jeeps on the road today are the brain children of Dieter Z. and Wolfgang B. so it's they who should be accountable - Dr. Z the only one around to take blame, which he won't. Why the market needs an Aspen or Sebring who knows, but these are very yesterday cars chasing today and fully rejected by tomorrow.
The product planning that went into creating this portfolio of brands was wrong-headed and those seeds were laid during 2002 when all these missteps were planned and locked in.
GM is weaker, both companies weaker in a "marriage of sequels" - full-on yesterday-oriented management who covet their perks and country clubs
more than success in their business. Because these guys are so daunted by the competitive pressure they face they choose to pretend it's
yesterday and hope this perfect storm will blow over... not so much.
Pairing these two companies is also the death of Ford so how ironic that the American companies commit hari kari through their own
myopia - taking themselves out by default of their mis-treatment of their customers and sipping tea behind the fort walls while outside, a little
tea party was brewing.
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throwback 8:21AM (2/19/2007)
This makes no sense. Madness indeed. I have to think GM is talking cooperation and not purchase. GM has too many brands know.
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the friendly grizzly 7:59AM (2/19/2007)
Jim in #3. MoPar fans will continue to buy USED Chrysler products that were designed before the Anschlus.
Those of us who DID buy Chryslers have not done so since the days when Mitsubishi engines were introduced, and now old Mercedes content. We bought cars with TorqueFlites, 383s, 273s, 318s, 2.2 and 2.5 litre Weertman 4s, 225s, 170s, 199s. Maybe even a few 4.06s, an AMC design, not MoPar, because they are so sturdy.
I have moved on, to GM, to be specific. So has my family. Our vehicles have been virtually trouble-free.
As for GM buying Chrysler: GM is showing signs of revival. Contrary to the SaBenzAuVoGen and the NiSuTyBishiDaZda crowd, GM makes a darn good car, and an even better truck. I see no reason for GM to burden themselves with a line of cars full of this-n-that drive train and suspension pieces, aging factories, and a bloated dealer network.
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Sam 8:17AM (2/19/2007)
Jason (4) said: "Man.. all this is going to do is make it easier for the uneducated IDIOTS who buy imports to insult domestics, one less company for their little minds to remember."
Jason, if you think people who buy vehicles that are more reliable and hold their value better than the "bloated mas produced crap" are "IDIOTS" then you might want to reevaluate how you define "IDIOT."
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pd 8:40AM (2/19/2007)
I still dont see this happening, it would be a COLOSSAL MISTAKE. DCX showed a "merger" of this magnitude couldn't work, you would think GM would have learned from the FIAT FIASCO! I do see the chinese stepping up to buy Chrysler with their built in dealer network to get a toehold in this country, to unload their CRAP.
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Avinash machado 8:46AM (2/19/2007)
Perhaps DCX could spin off Jeep into a seperate unit and sell it seperately since the Jeep brand has a lot of cachet.Then they could sell Chrysler seperately.
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Pete 9:11AM (2/19/2007)
There are a million reasons why this deal makes absolutely no sense whatsoever for GM. They've just begun digging their way out the hole they've been stuck in for the last 5-7 years, and now they want to add a new albatross around their neck, it's just bad business.
That said, there is one reason why buying Chrysler is the least worst choice, at least according to the General...preventing someone else from buying them. If a Chinese or Korean based firm, w/ the support and backing of their respective gov'ts purchased Chrysler, they could use their newfound dealer network to start dumping their artificially cheap cars/trucks here.
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Brad 9:32AM (2/19/2007)
If they have the stroke, GM should buy chrysler from Daimler, and just shut it down, other than jeep. they should at the same time buy back about half of the existing GM dealerships (or all of them), and close them. Take the whole thing as a write off against profits for the concievable future and prosper. This would immediately get rid of all the excess production, and excess competition between sales outlets. This would raise prices, stablize the US auto industry, and give them enough money to design and build better products.
all that said, nothing will come of these rumors.
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wally 9:38AM (2/19/2007)
The best is yet to come!!!
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uncle john 9:50AM (2/19/2007)
15. There are a million reasons why this deal makes absolutely no sense whatsoever for GM
Unless, the deal also includes Mercedes?
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Bob H. 4:10PM (2/19/2007)
How about this for a possibility:
GM buys Chrysler from Damlier..
Extracts Jeep.
Sells remaining units to Nissan/Renault in combination with Kirk Kirkorian...who puts his folks in charge of the Chrysler unit...
What Kirkorian wanted in the first place
Think about those possibilities
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DJ 10:08AM (2/19/2007)
GM, thanks in LARGE part to Bob Lutz, has seen the error of it's ways and made some impressive stides in the past 18 months. Well built, good looking, great performing cars (hmm, just like what Lutz did at Chrysler with the 300M, Viper, Prowler, PT, etc.) are finally coming out of the General's factories. Buying Chrysler would be a huge mistake unless they eliminate the Chrysler and Dodge brands altogether. They could use the current 300/Magnum platform for it's own line of large RWD cars, but that is unlikely since these are based on the previous MB E-class. The real value in buying Chrysler is they would be getting a lineup of brand spanking new minivans, a market they abandoned, but still generates 200,000 units in sales a year. They would also get Jeep, which could then be folded in with Hummer to complete that lineup. Beyond those, what does Chrysler offer that GM doesn't already have? No hybrid program, no great small car, nothing in engines that GM hasn't already surpassed, foreign markets ????. More debt, more labor and healthcare issues and dated factories is just the worst of it.
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