Chrysler & GM Merger?

I’m going to take some time off from ranting about the financial fiasco and the election to write about the latest semi-rumor that has hit the automotive industry.

According to the Oakland Press, Chrysler and GM are considering a merger. The interesting thing about this is that there may actually be some truth in this. Sure, there have been rumors in the past about various companies merging or taking over another company, but this one is making some sense, at least for the long term. Two quotes in the article make this more than a rumor:

Chrysler said Saturday that the company was looking at several different options.

“As we have said, the company is looking at a number of potential global partnerships as it explores growth opportunities around the world,” Chrysler spokeswoman Lori McTavish said in a statement.

Meanwhile, a Chrysler official put the chances of a deal at about “50/50” and a key United Auto Workers official said neither company has approached the UAW. “No one has talked to us about it,” said the official who asked not to be identified.

This follows on the heels of a $25 Billion loan package to the automotive industry (separate from the financial bailout package). Adding to the mix is lower sales in the automotive industry, and the fact that GM is spending approximately $1 Billion a month to keep itself going in this slowdown. Finally, the crunch in the credit markets is going to make any changes in the corporate structure of either company difficult.

Now exactly what is going to happen is anyone’s guess.  My guess is that this merger isn’t going to happen – at least anytime soon.  I can see that if Chrysler doesn’t live up to Cerberus’s expectations, it will be sold to the highest bidder and Chrysler would most likely cease to exist.

But then again, I’ve been wrong before…

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About Tom Roland

EE for 25 Years, Two Patents - now a certified PMP. Married twice, burned once. One son with Asperger's Syndrome. Two cats. Conservative leaning to the Right. NRA Life Member.
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5 Responses to Chrysler & GM Merger?

  1. Jennifer says:

    You know Tom, it wouldn’t suprise me in the least, if this merger happened. This financial crisis has hit everyone hard. I am kind of clueless when it comes to this, what exactly happens with a merger? Do both companies change names, or does one buy out the other and keep their name?

  2. You may see mergers all over the place. I’m praying corporate America doesn’t go into a complete tailspin over this crap.

  3. Debbie says:

    I heard something about this a couple of days ago, but I have been so busy and away from the computer, no time to follow up.

    If this will save either company from bankruptcy or needing a bailout, I say go for it.

  4. NEO, SOC says:

    The question is will the unions finally make the changes necessary to help the responsible employee without bankrupting the business and allowing America to get back to creating quality products. Sorry, people but we’ve been off the grid for a while on producing anything of quality!

  5. Tom says:

    Jennifer – When companies “merge,” they combine resources. As some resources (like departments, factories, and people) are duplicated, the company then closes down the departments and fires the people that they deem that will not contribute to the success of the new company. As far as the naming goes, that would be determined ahead of time.

    Pasadena – Unlike the “merger mania” of the 80’s and 90’s where companies were acquired, cut up & the pieces sold off for profit, mergers will take place so that the companies can survive.

    Debbie – Both companies have some time to recover before declaring Chapter 11. As it is, Congress has approved a $25 Billion loan to the automotive companies for investment in future transportation technology.

    Neo – The last UAW agreement froze wages for the term of the contract, and the members are picking up more of the cost of health care. Additionally, the UAW is going to administer the membership’s health care instead of the automotive companies. As far a quality is concerned, the latest JD Powers survey has the domestics fairly close to the foreign car makers.

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