ChryCo Prez Jim Press, CEO Bob Nardelli: "Merge, Baby, Merge"
CEO Bob Nardelli tells CNBC [via MSNBC] that “a steep decline in U.S. auto sales has created an environment for industry consolidation.” And just like that, out comes the “S” word. “It certainly creates an environment for consolidation where you can get synergies of productivity that will allow you to be more competitive, not only here in the U.S. market, but on a global basis,” Nardelli opined. And though ChryCo execs won’t talk about the GM deal, they’re more than happy to suggest mergers for others in the biz– a sure-fire sign that more bad news is coming. Chrysler’s President Jim Press tells Bloomberg that “there is too much capacity in the supplier community, there are too many dealers, there is too much manufacturing capacity. We think alliances are good things for the industry.” Keep it nice and vague these things sound good. Get back to the specifics of a GM-Chrysler hookup, and Press’s logic leaves the building. “In our view, it is unlikely that the combined entity would be able to maintain 11 distinct brands and roughly 30 percent market share,” says Deutsche Bank analyst Rod Lache. Though Chrysler’s cash is the big prize for GM, much of that reported $11b pile would be eaten-up by consolidation costs. But that would be, you know, later.
“a steep decline in U.S. auto sales has created an environment for industry consolidation.” Translation, "I'll get another $210 million golden parachute when the deal goes through and I get sacked by GM!" I sure wish I could make my fortune his way.
And how much of Chrysler's "cash" is borrowed money? This is almost like marrying someone because they still haven't used up their credit limit on the visa card! Never mind what the wedding and later divorce will cost.
@ Redbarchetta: Actually, Packard bought Studebaker, sort of, thinking that Studebaker would let them expand their middle-market business and reverse the brand dilution that had been taking place since the the late 1930s. About two years after the merger, Studebaker-Packard was acquired by Curtiss-Wright, which intended to run the factories at full capacity for two years as a tax write-off and then pull the plug. They did kill Packard in 1958, but the success of the Lark earned Studebaker a brief reprieve. The board, though, did not invest most of the Lark profits in cars; instead, they diversified outside the auto business. S-P actually outlived the Studebaker brand by more than a decade, although not in the automotive industry.