REPORT: GM could consume Chrysler in one bite
In 1987, Chrysler purchased the American Motors Corporation from Renault, and all AMC models ceased to exist shortly thereafter. The only survivor was Jeep, which was really the only brand worth rescuing. Could something similar happen today if GM "merges" with Chrysler? Once again, Chrysler's most desirable asset is the Jeep brand, along with its minivans – a segment that General Motors has completely abandoned in favor of three-row crossovers. In such a scenario, the Chrysler and Dodge brands would basically cease to exist, with General Motors phasing the products it wants into its own lineups. Newer, efficient plants could be converted to build GM vehicles, which would allow the General to close older plants and lose excess production capacity that isn't needed. Any cash that Chrysler has on hand would allow GM to float its own operations that much longer before returning to profitability. This is a simplistic overview, but it is a possibility being floated around by analysts that would explain why GM has any interest in Chrysler at all. We imagine there would be huge opposition to the situation playing out like this, not the least of which would come from the United Auto Workers union, which makes us wonder how likely such a "merger" could possibly be.
[Source: The Detroit News]
Reader Comments (Page 1 of 3)
Frank 4:38PM (10/16/2008)
Adding injury to insult. It sounds like a recipe for Garbage.
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HotRodzNKustoms 4:41PM (10/16/2008)
That is the only way a merger/acquisition would make any sense, but I could not imagine the jobs that will be lost.
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Tool 7:28PM (10/16/2008)
I agree. But I would add one thing.
The only way this deal makes ANY sense is that it would give GM license to fix the "too many brands, too many models, too many dealers" conundrum that plagues GM.
This way, GM could cherry pick Chrysler (minivans, RWD LX platform, and Jeep brand) to create 3 extremely focused brands/portfolios:
- Chevrolet
- Cadillac
- Jeep (and this could be a marquee, sold at select Chevy dealers, if necessary)
Otherwise, GM is left with the same problems it currently has.
Dinger 4:42PM (10/16/2008)
Great graphic!
Bad idea.
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Benfolio 5:50PM (10/16/2008)
Except Pac Man never had eyes except on the arcade game artwork.
WAKA WAKA WAKA
MikeW 7:09PM (10/16/2008)
http://video.google.com/videoplay?docid=1367087148554825643&ei=eMj3SKP8LoXc-AHD2ICJBA&q=pac+man
Should it be the other way?
Cerberus is running Chrysler into the ground.
Hike15 4:42PM (10/16/2008)
i hope gm keeeps some of the better products like the minivans and usable jeep products but loses the bad ones such as sebring and nitro
so gm would gain something out of it
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dukeisduke 4:44PM (10/16/2008)
Jeep could be merged into Hummer (keep the Wrangler and Liberty, then dump everything else), then the Jeep-Hummer division spun off. Sell off Viper to Roush, Saleen, or Panoz.
Take over minivan production and eventually design more GM content into it (powertrain, electronics, etc).
Ditch everything else (sorry, Challenger fans).
Cerberus has realized they're in way over their heads, buying into the auto business, and they're ready to cut their losses.
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fixyourthinking 4:50PM (10/16/2008)
Ummm ... the PT Cruiser is a huge asset of Chrysler. It was so much of a hit Chevy (GM) copied it almost identically with the HHR
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Cornholio 6:45PM (10/16/2008)
Correction - it was a hit 5-7 years ago. Today, not so much. It's time has come and gone.
Gabagool 4:46PM (10/16/2008)
But why would GM need Jeep in the first place. All Jeep makes is SUVs, only one of them is good (Cherokee), all others are some sort of cheap CUVs.
There's Wrangler, but is Wrangler worth all that money? Come on, you can just make a smaller Hummer which also has that off road cred.
Look i said this before, MANY MANY times, fire Wagoner, at this point you can not go wrong with anyone, Lutz, Nasser.......whoever you can.
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LMBVette 9:23AM (10/17/2008)
Don't forget....there is a relatively brand new production plant in Toledo, OH that builds Jeeps. That is a state of the art plant and is probably one of the biggest draws for GM.
TyWright 4:48PM (10/16/2008)
The only good thing about this post is seeing PacMan again. Hi PacMan!
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Eric Liberatore 4:48PM (10/16/2008)
If Mercedes couldn't do good with Chrsler and the new owners can't do anything with them what sense does it make for GM to buy them? Two sinking ships can't rescue each other.
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Gabagool 4:50PM (10/16/2008)
Hike but here's my question...why buy them in the first place? Why stend a dime on them, why start a war with dealers, why would you want UAW to hate you even more, because GM will lay off a lot of workers.
Just stay on the sidelines and develop your own cars. GM as it is has too many brands, also people will not buy Town and Country simply because it is made by Chrysler, they buy it becasuse it is a great product. GM showed that they can not make good minivans. These minivans will simply die out in 5-6 years after GM people will lay their hand on them.
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TJ 4:50PM (10/16/2008)
first, Chrysler had massive cash reserves before ze germans.... they were basically pillaged for eight straight years, and probably have no cash left on hand, especially with the $$$ they have been dumping into rapid retooling and development band-aids for existing vehicles (like the Patriot interior).
now, GM would buy them to acquire Jeep (an all-SUV brand) while trying to dump Hummer (an all-SUV brand)? Makes no sense.
I say the report is bunk as written.
Alternatively: Cerberus is a financial management company. Say all you want about the industries they own, but this is what they are. they own ChryFi, they own 51% of GMAC. GMAC is a drain on GM in the last few years, taking billions in losses. I do not think it would be out of the question to see a swap. Chrysler for GMAC, plus a few extra goodies and a solid working relationship contract so the financial arms remain within arms-length from the manufacturer (ie, captive)
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Gabagool 4:55PM (10/16/2008)
TJ did you ever think that Cerberus is blackmailing GM. You either buy Chrysler from us, or we will make sure that all GMAC costumers would have to meet 700 score. I read in WSJ that 60% of people who have purchased a GM vehicle do not meet that criteria. So they are telling GM buy Chrysler or lose 60% of your costumers.
TJ 5:15PM (10/16/2008)
Is that really blackmail though? Cerberus is the controlling partner and can make independent decisions as to how the company should be run. That's not blackmail, that's business. In that case, GM has options... it might not be considered good options, but options nonetheless.
jamie 12:18PM (10/17/2008)
Your analysis is correct.
Cerberus wants the rest of GMAC because GM is preventing GMAC from merging with Chrysler Financial. This move would save Cerberus beaucoup de bucks and make them a leader in auto finance. Hopefully they could reap big rewards when the Feds bailout out their ResCap arm. Good deal for the three headed dog from hell.
GM is eying the $11 billion cash reserve sitting on Chrysler's books at present. GM needs cash. Chrysler's got it. Plus you get all the benefits of being #1 again and for a long time to come. A bigger market share is crucial to GM's future viability. This move would propel them into a better position to make that happen. Sure there a re a few glitches to work out, but I am sure Cerberus' $26 portfolio could help in that regard. The UAW would likely agree if Chrysler was still run separately with GM acting as overlord.
It's a win-win situation. I say, Go for it!
Sean 6:42PM (10/16/2008)
As much as I don't really care for brand names, it'd be kinda sad to see things like the 300, Charger, and Challenger disappear to emptybrandspace.
...and maybe the Caliber but I don't even understand why I like that car.
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