DetN: GM May "Absorb" Chrysler
Absorb? Absurd! Still, The Detroit News is reporting the GM Chrysler merger deal as if it exists. Which, if true, is one scary ass concept. Well, to most rational people. Which, according to the trifecta of scribes assigned to story, doesn’t include everyone. “Analysts say a deal along the lines of Chrysler’s purchase of AMC, which eliminated Detroit’s No. 4 automaker as an entity and all its brands except Jeep, would make sense for GM.” Huh? Ladies and gentlemen, Aaron Bragman, an analyst at Global Insight: “For GM, the only reason to absorb Chrysler would be to eliminate a competitor.” Yes, but does that make any sense? No comment. So, never mind analysts. Let’s talk to someone in the shadows. “The source familiar with the negotiations told The Detroit News that GM could cut costs by eliminating much of Chrysler’s staff and gradually shifting production of Chrysler vehicles to use more GM components.” THE source? We’re down to one now are we? And is that BS or what? But wait! There’s more!
“At GM, many top executives support acquiring Chrysler, but only in a deal like Chrysler’s acquisition of AMC from Renault.” Many? How many? Who? Look, I’m not saying this is conjecture masquerading as journalism. OK, I am. Especially when I read supporting nonsense like this: “Analysts say a deal along the lines of Chrysler’s purchase of AMC, which eliminated Detroit’s No. 4 automaker as an entity and all its brands except Jeep, would make sense for GM. Such a deal would differ from the 1998 acquisition of Chrysler by Germany’s Daimler-Benz AG, which left the U.S. carmaker operating intact as a separate division. Instead, Chrysler would be completely absorbed into GM and melded into its car making and other operations over time.” The truth is that both automakers are going down. While a merger would be crowning buffoonery in an epic tale of missed opportunties and squandered fortunes, even Detroit execs know that. Don’t they?
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ajla: "If GM merges with Chrysler, then they can revive AMC, Eagle, and Plymouth." Don't forget DeSoto. There's a lot of pent-up demand for DeSoto. And they wouldn't need to make new commercials; they could just run old clips of Groucho Marx singing "It's de-lovely...." Damned if I can see why GM would want to acquire Chrysler. They don't need the production capacity or the brands or the dealer network. And if GM outlasts Chrysler, it can buy the dies and tools for T&Cs and Caravans at a bankruptcy auction.
I suspect there is more fire to go with the smoke we are seeing in the press than might seem reasonable. Remember, we are talking about Detroit Suits here.