Comments on: GM – Chrysler “Merger:” A Little Background

By: Strippo

Strippo — Sun, 12 Oct 2008 16:51:52 +0000

The GM – Chrysler merger is a perfect analogy to two swimmers who were drowning that somehow made their way to each other only to fight each other to stay above the water and drown faster than they would have if they tried to survive on their own.

In an objectivist utopia you would be right. But if GM is “arguably” too big to allow to fail, then merging GM and Chrysler only improves that argument. A sweet bailout or painful BK filing of some sort is a certainty for GM now, period. Under such circumstances increasing its footprint as much as possible is a rational strategy. After all, there are plenty of helpless little people on shore chained to GM and/or Chrysler, so if they drown together, thousands if not millions will drown with them. The scarier GM can make that scenario, the better – for GM, that is.

By: guyincognito

guyincognito — Sat, 11 Oct 2008 22:03:25 +0000

WTF? I feel like I woke up in bizzaro world, well more than usual anyway. How could anyone seriously consider a GM, Chrysler merger? Its an act so stupid it needs no analogy. In fact, should it happen, it would become an analogy of its own. “Oh, I knew Sherry and John wouldn’t work out, they were like GM and Chrysler.”

By: br549

br549 — Sat, 11 Oct 2008 20:13:31 +0000

How about if, immediately following the swap, GM files C-11, reopens the labor agreement, and eliminates jobs preservation language. That way, it nixes a competitor (such as it is) an albatross (GMAC) and an unrealistic UAW contract while gaining a world class minivan and a still-valuable Jeep brand. I could envision this working decidedly in GM’s favor.

By: Robert Schwartz

Robert Schwartz — Sat, 11 Oct 2008 20:00:22 +0000

But wait it gets even weirder:
G.M. Held Merger Talks With Ford Before Chrysler by Bill Vlasic in the NYTimes on October 11, 2008.

American Leyland here we come.

By: Steve Biro

Steve Biro — Sat, 11 Oct 2008 16:22:46 +0000

I agree… a Chrysler purchase makes little or no sense for GM- a company that already has more brands than it can handle. It’s possible GM could acquire Chrysler, keep Jeep and shut down Chrysler’s automaking operations.

But would acquiring Jeep be a net gain in the current environment? Possibly, but I can’t help but think that Jeep has already seen its best days for a while.

I keep imagining that Renault/Nissan or VW will eventually get Chrysler – assuming an Indian or Chinese company doesn’t step in if the Europeans hold out just a bit too long.

Either way, any potential deal with GM would have to involve no cash.

By: jaje

jaje — Sat, 11 Oct 2008 16:22:12 +0000

By: indi500fan

indi500fan — Sat, 11 Oct 2008 16:17:22 +0000

Don’t think Studebaker-Packard.
Think American Leyland.
Barack H O, San Fran Nan, Dingy Harry, and Ron Gettelfinger.

By: Michael Karesh

Michael Karesh — Sat, 11 Oct 2008 15:48:26 +0000

If it made any sense to buy Chrysler, then Renault or VW would have already done so. Both want a larger presence in North America. I’ve been assuming that both have been playing chicken with Cerberus. The longer they wait, the worse off Chrysler gets, but also the lower the selling price gets.

There’s also of course the risk that someone will jump in first. It’s in Cerberus’ interest to talk with GM if only because this might scare Renault or VW into acting.

There is very little reason for GM to acquire Chrysler, unless it’s buried in the details of corporate taxes or government bailouts.

By: Cicero

Cicero — Sat, 11 Oct 2008 15:47:49 +0000

Cerberus offering to sell its half of GMAC back to GM? I’d love to have been in the conference room to hear that presentation.