GM, Chrysler holding merger talks again? Or not...
Can this really be happening all over again? Weeks after merger talks between Chrysler and GM seemed to implode, the companies may be talking about hooking up again, according to the Wall Street Journal. General Motors Corp. and Chrysler LLC have reportedly stepped back into the negotiation room after Chrysler owner Cerberus Capital Management LP said that maybe, just maybe, it's willing to give up some ownership in the Pentastar. In fact, it may be that Cerberus has started this latest round of talks to show Washington it's willing to play nice with the other kids to secure part of a $14 billion rescue package that's on the table.
Nevertheless, GM spokesman Tony Cervone woke up this morning and immediately denied that merger talks between the two weakest Detroit automakers have resumed, saying only that GM's stance on the merger is the same as it was in November.
We talked about this the last time a merger was mentioned, but consolidating these two automakers would most likely lead to massive layoffs and more than a few plant shutdowns, plus the elimination of a lot of Chrysler models. There is too much capacity and overlap between the two companies' product lineups, but with money running low for both of them, merging could still be made a condition of receiving federal assistance.
[Source: Wall Street Journal via The Globe and Mail, Marketwatch]
Reader Comments (Page 1 of 2)
FRANK DUKES 11:03AM (12/18/2008)
WOULDNT THE ELIMANATION OF A LOT OF CHRYSLER PRODUCTS BE A GOOD THING!!??
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Mr.Oak 11:05AM (12/18/2008)
Sorry bout the jobs, but it sure would.
happy_penguin 11:58AM (12/18/2008)
I DON'T KNOW, BUT TURNING OFF THE CAPSLOCK WOULD BE NICE.
Mobius_1 1:02PM (12/18/2008)
JUST BECAUSE THE TWO LOGOS IN THE PICTURE ARE TALKING IN CAPS DOESNT MEAN YOU SHOULD.
Tom 11:03AM (12/18/2008)
Still loving all the speech bubbles on everything. Keep it up guys (and gals)!!
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Jason 11:33AM (12/18/2008)
Yeah the speech bubbles are hilarious. Well played. :)
Frank 1:00PM (12/18/2008)
From http://www.allpar.com/weblogs/
Over reactions
December 18th, 2008 by DaveAdmin
It doesn’t take much to set off the Chrysler-haters these days. The Wall Street Journal prints a rumor and before you know it, Autoblog has its comic balloons and “Chrysler sucks/is dead/should be dead” hat on. Chrysler shuts down its production plants for two extra weeks - not unlike Toyota - and we get a tagline that Chrysler’s in deep trouble and might not re-open the plants. The UAW refuses to take massive pay cuts “tomorrow” — which they can’t legally do anyway since the locals have to vote — and they’re being unreasonable, inflexible fatcats (despite agreeing to take a rather fuzzy and draconian deal).
Let’s all get a grip here. Cerberus is not acting like an outfit that just wants out as soon as it can get out. Chrysler is not going to fail this month. Neither is GM. Bankruptcy is not something you rush into without thought - unlike, apparently, automotive news reporting.
jaguar879 11:05AM (12/18/2008)
I like how the government makes it clear that they are the last ones you'd want running an automaker, but then make recommendations on how to run their business.
Right now, GM is like a leaky ship that has some chance of survival. Chrysler is like an anchor. Putting them together is only going to help Chrysler stay afloat long enough to sink GM.
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G-Meister 11:10AM (12/18/2008)
Funny how no one ever asked Congress if they would consider working for free until the budget is back in balance. Or that the strongest opponents to ANY bailout, are the ones who have the most to gain in their states by a GM in Ch11
G-Meister 11:06AM (12/18/2008)
The problem I still can't get past is that Chrysler really has nothing GM wants at this point. Every product is an overlap, except for the Jeep brand. I really see that being the only thing that survives- then again, its also the only thing that survives from American Motors.
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Jared 11:51AM (12/18/2008)
I agree that Jeep and perhaps the minivans are about the only things that would survive a merger with GM.
If the 2011 300c/Charger update program is very far along, perhaps that would be worth saving.
But I can't see saving anything else. GM already has a competitive pickup line -- they don't need another. Nissan may want to buy the Dodge full-size pickup line to replace the Titan which it is canceling.
Dakota is past its sell-by date. Aspen/Durango are already buried. Sebring/Avenger should be buried. The less said about Compass/Patriot, the better. Nitro is hopeless.
The 600 sales per year for Viper simply isn't worth the investment for a company with GM's overhead. It might work if owned by a small company (e.g., Saleen), but GM already has its halo car (ZR-1) and doesn't need a second one.
whofan 12:11PM (12/18/2008)
I agree with most everything except the Patriot. The Jeep Patriot is a pretty nice vehicle. The new Ram and minivans are nice too.
Jay Evans 11:15AM (12/18/2008)
Sort of like the Andrea Dorea coming to the rescue of the Titanic
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Jared 11:52AM (12/18/2008)
I agree. I don't understand how two drowning men clinging together keep from drowning.
JN 11:22AM (12/18/2008)
I'm about ready to just throw my hands in the air and say, "You know what, guys, just declare bankruptcy already. I give up."
As a longtime Chrysler owner, I really hate saying that. Unfortunately, at this point, I don't see any good way out for them.
Guess I'd better get ready to start shopping for a Ford again. Been a long time since I set foot in one of their dealerships ...
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Rainy99 11:48AM (12/18/2008)
I didn't even read the story. The graphic had me in lols. Thank you AB!
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RetardedSparks 11:50AM (12/18/2008)
This is just a marriage arrange by Washington to spin what is just another way to liquidate Chrysler. Bush can spend the rest of his life (like he has the last week) bragging about how he "saved" the auto industry by "merging two great companies" etc etc.
WE all know there will be no Chrysler left, and everyone at Chrysler knows that too, but Washington has a REAL problem on it hands bailing out Cerberus, and by mixing up that pure cash gift (it's no bailout, as Cerberus is and will remain a going entity, even if they had to eat a $7B loss on Chrysler) with a merger/reorganization/loan/guarantee/bailout they are hoping nobody will bother to figure out where each of the dollars actually went.
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Rainy99 11:56AM (12/18/2008)
Chrysler is the only one that needs to be torn apart. I Chrysler's parent is not willing to pony up some $$, why should we? I believe we need to do something to keep GM on the path, Ford will survive... but Chrysler's time is up.
Jeep will make it in some form. The minivans may make it. That's about it.
Frank 1:07PM (12/18/2008)
Guys,
There are limits in Cerberus' charter to how much money they can put into a single investment, and they are at that limit. Now I believe they need to amend that charter. Just like the UAW needs to hold a vote of the locals to push the wage concessions forward to now. But that's the reason Cerberus simply hasn't handed over more money to Chrysler.
As to this newest RUMOR - How many times do media outlets need to be burned by their "unnamed sources" providing poor information before they step up and do some real reporting?
Jei 11:56AM (12/18/2008)
This is what I thought Congress was holding out for. They want at least one of the Big 3 to either be purchased or shut down. If GM & Chrysler already have a preliminary plan to do that, it would provide proof that the automakers are serious about the industry's survival. A merger would automatically require re-organization, eliminating product overlap on both ends...more so for Chrysler, and cutting manufacturing capacity. These are items that Congress wants them to do anyway and it should lay more ground for the auto giants to request more bailout funds.
I think if a GM-Chrysler merger was a real possibility, the Treasury shouldn't have many problems finding a bank to lend the automakers the govt-backed funds.
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