• Oct 12th 2008 at 6:31PM
  • 6
It's been a crazy few days as news broke that Chrysler and General Motors have been in talks to combine operations. It turns out that there's a pretty significant back-story to these proceedings, and it involves Cerberus Capital Management's possible desire to shed its car-building operations and acquire the rest of GMAC, of which it already holds a controlling stake of 51%, with GM holding holding the other 49%. According to reports, Cerberus would like to combine Chrysler Financial with GMAC, which would allow it to merge the offices of the two financial institutions and reduce costs. All right, that might make some sense, but what about merging the two automakers? That's the part that seems so confusing to analysts and us meager bloggers. Somehow, we feel certain that there's more to this story, which we'll be hearing about for some time.
[Source: The Detroit News]

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    • 1 Second Ago
      • 6 Years Ago
      I agree with Ed
      But to a bigger extent both companies need to consolidate.

      The only thing that Chrysler has that worth buying is the Jeep line and their minivans.
      It would be no shock seeing jeep sold again they are like the village bike everyone's had a ride with Jeep
      i mean Chrysler is like the 3rd or 4th company to own them

      • 6 Years Ago
      I don't know if some of you read Autoextremist.com but Pete DeLorenzo posted this week's rant more earlier due to the context and he mentionned at the last paragraph there more to come and it involve Carlos Ghosn......
      • 6 Years Ago
      So GM gets:
      -3 more brands it has to handle (in addition to the 8 they are already barely juggling)
      -3,000 more dealerships to deal with it (when they are trying to cut the number of dealerships it already has)
      - more UAW workers and contracts to negotiate
      - and they lose GMAC and get no money
      - horrible money-pit that is Chrysler

      - Cerberus gets:
      - unload the horrible money-pit that is Chrysler
      - 100% control of GMAC
      - doesn't cost them a dime
      • 6 Years Ago
      This would make no sense for GM while only helping cerberus.

      Think of it with the bail out GMAC will no longer have any bad mortgages on their books. Considering they own Dytech they would be in a better position for a profitable recovery in only 2-3 years.

      What would GM get out of this? GMAC is gone which is only a short term problem. Yet they will get a long term massive liability. A company that hasn't made money in years

      Not only will the inherit Chrysler's Debt but also all of those health insurance and pension pains. Those liabilities are the same reason why MB dumped them.

      Chrysler is way over leveraged their market value to liability is almost 4:1

      GM and Ford both need to treat water for only for 18 months or so. Too bad they wasted so much money on unprofitble sectors.

      If they care about the short term they will dump the things that wont be selling. They need to dump truck production and keep only 1-2 plants open right now they have several plants

      This would make sense since i cant see trucking being sold to contractors in any real numbers for at least the next 24-36 months.

      They need to even go as far as dump the Buick label for North america and keep it only in china.

      Pontiac shouldnt be its own brand anymore and should me merged as a sport brand of GM>

      Think of it they waste dozens of millions of dollars tooling separate bumpers for the same car such as the Cobalt and G5. The same with the G6 and malibu.
      I could go on for hours.

        • 6 Years Ago
        FYI the Cobalt & G5 have the exact same bumper. The plastic fascia is different, which is a minor cost. In fact every bit of steel is the same between them, the G5 is literally just new badges and slight interior changes.

        Blatant re-badges like the G5 cost very little to do compared to a differentiated product that's why it is so hard for GM to stop doing it.

        I agree with your take on the rumored deal. Bad for GM unless they just take bits and pieces and junk the rest.
      • 6 Years Ago
      Well... if GM merge with Chrysler that would make sense!! Instead of having two bad companies bleeding all over the place, why not just have one!! But the best thing for them to do would be to merge and THEN....... file for bankruptcy!! Might as well kill two sick birds with one stone!! Unless GM/Chrysler gets some federal aid....bankruptcy to me seem like the only option to save them from their chronic pain & suffering.
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