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October 13, 2008
GM+Chrysler? Well…
The big news in Detroit this weekend was the talks between GM and Cerberus, the owners of Chrysler LLC. The nature of the talks was, of course, unspecified, but pundits (myself included) are going nuts over the idea of a GM-Chrysler merger. The effects of such a merger would be interesting—GM would gain Jeep, which would ease the psychological pain of selling off Hummer. Jeep is one of the best-known brands by any measure, and I’ve long wondered when GM would make a bid for it. The minivan platform would also be a big benefit for GM—it willingly conceded that market to Chrysler several years ago. I believe that the festering sore that is Chrysler’s passenger car operations would likely be pared down to a single platform (wait, isn’t it already?), which would be used to build low-volume sedans.
The Viper would, unfortunately, probably cease to exist, which would result in a less competitive Corvette over time. The biggest question would surround the Dodge truck operations—truck sales have fallen so much lately that it would be very difficult to justify operation of two truck platforms within one company. So which one survives? I’m not prepared to call that one. If we all get back into our Fords (Ford rejected overtures from GM earlier this year) and drive ourselves back to reality, we should remember that Cerberus owns the 51% of GMAC that GM doesn’t, and it’s much more likely that any negotiations over the last few weeks were centered around those financial operations instead of around automotive operations. I’ll say it for the hundredth time—selling Chrysler to Magna makes way more sense. Even if I do think that Jeep should go to GM.
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melville248
Oct 14, 2008 at 3:53 pm
Why, would two companies, both with cash-flow issues, see a merger as making any kind of sense?
Dhillaz
Oct 14, 2008 at 12:27 pm
Yeah, what are those cars? The look like a sedan version of the Vauxhall Corsa.
GTwildfire
Oct 14, 2008 at 4:31 am
Word has it that GM has about 9 or 10 months worth of money to work with, provided things don’t get any worse. Chrysler, while in worse shape than GM or Ford for that matter, has more in their reserves and don’t be surprised if Ceberus (whatever the spelling) might throw in some more to sweeten the deal somehow.
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No matter what, I wouldn’t want to be working at DC right now. If they’re bought it could very well be to grab a few models and the cash, and discard all the rest like an orange peel.
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Eliminating DC would thin the domestic market a bit for when things improve, and GM could again be making minivans.
cknarf
Oct 14, 2008 at 1:25 am
is that a buick loko on that car?
wtf?
Jo Mama
Oct 13, 2008 at 9:03 pm
The unfortunate loser in this will probably be Jeep when GM tosses the solid front axles in the toilet and we all get stuck with IFS(and heaven forbid IRS). If that happens, I’m buying a used “real” Jeep.
“If I wanted a Hummer, I’d ask your sister.”
Gary Faules
Oct 13, 2008 at 8:31 pm
Since the facts are that GM is so deep in debt and when you consider they were so desperate they went to Ford for help, which had to be humiliating let alone the founders must have turned over in their graves, it’s common sense that should Cerberus consider a merge with them, Cerberus will be the one in the driver’s seat. No pun intended. GM gain Jeep? Are you kidding? GM stands to gain nothing and Cerberus will have complete control and if anyone stands to gain from this it’s them and not GM. Like any good merger, Cerberus will take anything that’s remotely good within GM’s infrastructure and sell the rest even at a loss and then dump the company. By doing so Cerberus will have eliminated some of the competition, gained any “secret properties” (after the government gets done sorting out anti-trust laws violations).
It’s called “Corporate raiding” and there’s nothing new about it. It’s merely a game that’s played by the big boys who have more money/power than most. http://en.wikipedia.org/wiki/Corporate_raider I would not be surprised to learn this was exactly what Cerberus had hoped for when they purchased Chrysler.