By on October 16, 2008

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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19 Comments on “DetN: GM May “Absorb” Chrysler...”


  • avatar
    getacargetacheck

    One variable you’re discounting is the Federal Government stepping in and loaning money or taking an equity stake in GM to help make the deal happen. Nobody in Washington wants to see thousands of people added to unemployment rolls in an uncontrolled fashion or have an entire heavy industry mired in bankruptcy. The die has been cast with Treasury taking ownership of a chunk of our banking system.

  • avatar
    tom

    “even Detroit execs know that. Don’t they?”

    The thing is though, the bigger the company and the more workers depend on it, the harder it is for the government to just let it die…maybe that’s the idea…not only fail, but fail spectacularly, so much so, that the government will have to come to the rescue, take over “General Mopar” and give the execs the compensation they think they deserve.

  • avatar
    John R

    How did that editorial put it? American Leyland? Yeah…

  • avatar
    Jerome10

    Too bad if Toyota decides they want to, they can essentially destroy GM.

    Buying Chrysler does nothing for GM long-term. When you’re no longer the big guy, you’re at the mercy of those who are.

  • avatar
    gslippy

    Two drowning swimmers do not add up to one that is buoyant.

    If GM wants to eliminate competition, they should start with the UAW.

    Chrysler makes interesting vehicles; please don’t bore us by GM-izing them.

  • avatar
    anoldbikeguy

    I find this totally ridiculous. A scenario that I can see as potentially happening is that Cerebus sells Chrysler to another OEM, like Renault, Tata or ?? They would then have the money to buy the GM stake in GMAC.

    BTW, what does the picture of the Nissan Murano have to do with this?

  • avatar

    I for one would like to see Chevy’s take on the Chrysler 300, a la the early 1990s Dodge Monaco. Sweet!

  • avatar
    indi500fan

    Certainly some of the most exciting times in my 40 yrs in the industry. I suppose bankers have the same feeling.

  • avatar
    ra_pro

    Looking at the American so-called Capitalism nothing seems “absurd” any more. When board stands by their management as it runs once-upon-a-time the biggest company in the world directly to the ground, the management then promptly asks and is granted multi-million dollar bonuses, after which the same management runs to Washington to plead for a bailout and receives the said bailout then I suppose dada just entered the economics arena.

    Lenin is thought to have said that Capitalism and Capitalists will be buried by their own greed; he never figured it’ll be their stupidity which will be even greater.

  • avatar
    Bunter1

    I’ll add this here also.

    “If there is any credibility to this looniness I want to propose a possible reason.

    “The Artist Formerly…etc.” could once again claim to be the biggest for an hour or two.

    Ego has cause crazier disasters, WWII comes to mind.

    Bunter”

  • avatar
    becurb

    getacargetacheck

    Nobody in Washington wants to see thousands of people added to unemployment rolls in an uncontrolled fashion or have an entire heavy industry mired in bankruptcy.

    Sorry, but that will happen anyway, merger or no. If we look at a moron merger, what will happen to Dodge?

    Ram – dead. Durango – dead. Dakota – dead (isn’t it anyway?). Bye-bye assembly line workers.
    Dodge/Cry-slur shared platforms – well, likely one will die. More workers bid adieu.

    Jeep – okay, probably stays. Course, the braniacs might roll it into Hummer!
    Cry-slur mini-van – stays, given that GM could never build one that sold well.

    Chal-ger? Who knows. How many additional Chal-gers will be sold with a GM badge on them? Probably not many, assuming GM keeps a Camaro competitor around.

    Sebring/Avenger/etc? Dead.

    And, how much would it cost GM to move the various Dodge racing teams (back) into Chebby racing teams? I dunno. Probably more than they could afford. Which isn’t saying much.

    So, from my point of view, a merger means many lost jobs. Just look at the numbers being kicked around with the HP-EDS merger regarding the number of “redundant positions that will be eliminated”.

    Bruce

  • avatar
    toxicroach

    Unless Cerebus is just giving the damn company away, how can GM AFFORD it?

  • avatar
    ajla

    If GM merges with Chrysler, then they can revive AMC, Eagle, and Plymouth.

    Thus GM becomes a 14 brand auto maker. This means there would be no gaps in a GM lineup for any customer, and the 10+ rebadges of the Volt and Cruze save the company. Also, GM could boast they have 50 cars that get 30+mpg hwy.

  • avatar
    jolo

    GM will do anything to get the sales crown back from Toyota. Even if it’s only for a few months before they both go down in flames, only to rise like a Phoenix (wasn’t that an Olds?) through the spell of government bailouts. Not one bailout, many, over the years, until they downsize themselves to where the government doesn’t think they are worth it anymore. But the execs will be happy…

  • avatar
    motownr

    Toxicroach:

    Chrysler would likely be merged in a transaction where GM would not come out of pocket with any cash. Cerberus would likely get a stake in the combined company.

    GM would gain net cash via the cash that is allegedly in Chrysler.

    Involving GMAC is another option. Especially as it seems likely that the government will become involved via the TARP facility.

  • avatar
    windswords

    anoldbikeguy:

    “BTW, what does the picture of the Nissan Murano have to do with this?”

    (Heh heh.)

  • avatar
    morbo

    All I know is that Ford Execs must have one Hell of a voodoo doll that they actually managed GM and the Dodge boys to talk serious merger.

    That and the Glass House Gang is doing a little celebration dance as we speak that this is happening.

  • avatar
    50merc

    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.

  • avatar
    John Horner

    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.

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