Filed under: Government/Legal, Hirings/Firings/Layoffs, Chrysler, LLC., GM, Earnings/Financials, UAW/Unions
GM wants Chrysler deal done soon, might not be able to get the cash
General Motors and Cerberus reportedly want to act as quickly as possible if they are going to make a move on Chrysler. It seems that the two bargainers would like to come to a decision before the upcoming Presidential elections, as they believe they may get more promises from either candidate before the actual vote takes place. A potential problem exists though, as General Motors is finding it tough to come up with the cash needed to make a deal happen and banks aren't about the lend it to them. An alternative option that's being considered is getting government backing for the deal.
Though it sounded hard to believe when we first heard the GM/Chrysler merger rumors, it truly appears that these talks are taking place at a very high level and the deal could indeed be on its way to. We'll just need to pay close attention in the next few weeks to the reactions from the Feds, the UAW and the thousands of workers that would inevitably be affected by the deal. Stay tuned.
[Sources: The Detroit News, Market Watch, Automotive News - sub. req'd]
_opt_thumbnail.jpg)
Reader Comments (Page 1 of 3)
Avinash machado 8:20AM (10/21/2008)
So what will the new merged company be called? General Mopar? Geneysler? Detroit Motors?
Reply
compy386 8:24AM (10/21/2008)
I don't see why it still can't be General Motors.
StickShift 8:26AM (10/21/2008)
I don't see why its happening at all.
Gabagool 8:38AM (10/21/2008)
The KEY question is who will be the CEO?
GMC=General Motors of Chrysler
AZZO45b 10:01AM (10/21/2008)
Gabagool: I hope your just joking with your "GMC" name... reality is Chrysler brands will not exist once bought by GM. This is not the "Merger of Equals" like 12 years ago.
What is sad about this story is that an element at GM actually seem to think that SIZE= REGAINED POWER. I would prefer Renault Nissan to buy Chrysler... they could use existing staffs & keep product lines
tim 11:26AM (10/21/2008)
taxpayers nightmare
Jei 1:12PM (10/21/2008)
Why are they saying this deal will be a "merger", and GM is the only company trying to get its hands on funds to "make a purchase"?
I think once the 2 auto giants agree on the initial deal, banks will be happy to lend any amount of funds to complete the transaction. Instead of having 2 companies to be nervous about, they'll have one really large one that can conceivable do better in the marketplace now that a hometown rival has been swallowed up.
john riley 8:26AM (10/21/2008)
Why is this merger a good idea? AFAIK GM does not need more capacity, more models, more people...
Reply
Justin 8:30AM (10/21/2008)
They'll scrap what they don't need and keep what they can use.
Mike 8:54AM (10/21/2008)
The deal is good for GM for 2 big reasons and a handful of small reasons. 1st, Chrysler has cash on hand that GM so badly needs. 2nd, Chrysler has some of the newest and most high tech plants in North America, so shifting out of some of GM's older plants to new facilities will save the company billions of dollars.
Other benefits include a Minivan that GM has failed at for decades and more small car platforms to choose from.
john riley 9:44AM (10/21/2008)
Seems to me that it is very expensive to close plants. That money could go do upgrading existing plants, if that is what is needed.
The mini-van and the jeep seem like the only Chrysler product segments that were competitive, and both of those are declining. I don't see that their small cars were competitive.
If GM did NOT bite on this, I think eventually a couple of the pieces that had some value might have been sold separately and the rest would have been dumped at no cost to GM.
BigWill 9:46AM (10/21/2008)
This is such an inanely bad idea that it's staggering.
Chrysler's cash on hand? We really don't know since Chrysler is private; the fact that they've been putting - rather badly - spin on the few financials they have released would make me suspicious of anything they say. Let's not forget GM doesn't get that cash free and clear - they still have to pay off Daimler for it's 20% share of Chrysler plus they'll have severance for a lot of Chrysler employees and dealers.
Minivans? GM just got out of the minivan business; Chrysler's minivans are such a "success" - they're incentivizing them to the point that 2009s can be had for several thousand below invoice. GM really needs that?
Chrysler's dead anyways; GM needs to bite the bullet, file for bankruptcy and let Cerebus get royally screwed on their Chrysler experiment.
tim 11:27AM (10/21/2008)
GM and Chrysler both own a lot money to Wall Street banks and they are now due by end of October. bankruptcy x 2 unless the gov't steps in...
http://online.wsj.com/article/SB122419486740342439.html
LMBVette 11:50AM (10/21/2008)
This is a good deal because Cerberus owns 51% of GMAC. GM will give Cerberus it's 49% of GMAC in exchange for Chrysler.
GM no longer has to worry about GMAC.......and Cerberus no longer has to worry about Chyrsler.
GM will then pick about Chyrsler and keep the factories and technology they want.
Cerberus will do the same with GMAC.
Everybody is happy.
joe 8:26AM (10/21/2008)
Wow..so as an American taxpayer, I know own part of an insurance company and now an auto manufacturer?
Do I get a discount on my premiums for car insurance?
This has to be the worst idea ever. There are so many overlapping products that Chrysler will be a hollow shell of its former self. Let the layoffs begin....
Reply
Tim 11:26AM (10/21/2008)
difference is that taxpayers still won't have any say in labor contracts and executive pay unlike other part owners. Nardelli and Wagoner will still make out like bandits on your dollar
Brock2525 8:28AM (10/21/2008)
It will still be called General Motors. Chrysler and Dodge will just simply cease to exist in a few years. GM will take the minivans and Jeep, and toss the rest.
Reply
EXP Jawa 8:34AM (10/21/2008)
But why would GM want Jeep? Granted it has brand equity that has value, but they already have one SUV-only brand that they're trying to dump. Would they really do better with Jeep instead of Hummer?
Reply
Duders 9:32AM (10/21/2008)
When you think of Hummer I'm sure that the same thing doesn't come to mind when you think of Jeep. Hummers are gas guzzlers and jeeps are fun off roaders. That's how people think. Even if the 4 cyl wrangler still gets teens on the highway.
Dude 9:39AM (10/21/2008)
There is a way that you could market Jeep and HUMMER together as a HUMMER/Jeep brand, but that would be tough for dealerships being such a small niche. Maybe they could add them to Saturn dealerships to bolster sales.
Another alternative is to lose the Jeep brand name and create the HUMMER H5 "Jeep" (assuming the H4 makes it to production). The only real "Jeep" is the Wrangler to most people anyway. The rest are off-road wagons.