GM and Chrysler - Merger talk.

[Nik]

Sth I found on a other site, thought about showing it to you guys (and ladies).


G.M. and Chrysler Explore Merger

By BILL VLASIC and ANDREW ROSS SORKIN
DETROIT — General Motors is in preliminary talks about a possible merger with Chrysler, a deal that could drastically remake the landscape of the auto industry by reducing the Big Three of Detroit automakers to the Big Two.

The talks between G.M. and Cerberus Capital Management, the private equity firm that owns Chrysler, began more than a month ago, and the negotiations are not certain to produce a deal. Two people close to the process said the chances of a merger were “50-50” as of Friday and would most likely still take weeks to work out.

A merger would be a historic event, with two of the most iconic names in American industry coming together to survive in an increasingly difficult environment. Both have roots dating back decades in Detroit and, with Ford, long dominated the auto industry — until Japanese and other foreign car makers began making inroads into the American market.

The auto industry is being pummeled from all sides — by high gas prices that have soured consumers on profitable S.U.V.’s, by a softening economy that has scared shoppers away from showrooms, and by tight credit that is making it difficult for willing buyers to obtain loans. Both G.M. and Chrysler have been struggling with product lineups that are out of sync with consumer demand for smaller, more fuel-efficient cars.

General Motors’ stock has fallen from more than $43 a share last year to less than $5, and it is burning through its cash hoard at a rapid rate. Chrysler, as a private company, no longer needs to report its finances.

The meetings between General Motors and Cerberus began more than a month ago, said people familiar with the discussions, and the companies have held several talks involving their most senior executives. Given that both G.M. and Chrysler are struggling, the two sides may determine a merger may not be in their best interests.

The exploratory talks have included debates over various calculations of the savings that would result from a merger, these people said, but neither side has yet to dig into each others’ private financial books and records.

At the same time, Cerberus is continuing to hold talks with other automakers including Nissan and Renault, said people familiar with the discussions. It is unclear at what stage those discussions have reached.

Speculation about a possible bankruptcy filing by G.M. has mounted in recent weeks because of the automaker’s dwindling cash reserves. The automaker had $21 billion in cash on hand at the end of the second quarter, but it was burning through more than $1 billion a month.

The credit rating firm Standard & Poor’s put G.M. on negative credit watch on Thursday.

But G.M. has said it is confident that it can increase its liquidity, and emphasized in a statement released Thursday that it was not considering a bankruptcy filing.

G.M. once commanded about 50 percent of the American vehicle market, but its share so far this year has fallen to 22 percent, according to the research firm Autodata. Chrysler had a market share of about 15 percent before its acquisition in 1998 by Daimler, but its share this year has dwindled to 11 percent.

How government and labor might react to a potential merger of G.M. and Chrysler is unclear. Antitrust questions could be raised, but political issues could be overshadowed by the precarious financial prospects of both automakers.

If G.M., the nation’s largest automaker, combined operations with Chrysler, the smallest of Detroit’s Big Three, they would create an auto giant that would surpass Japan’s Toyota Motor Company, which recently has been battling G.M. for bragging rights as the world’s largest automaker.

A G.M. spokesman declined to comment on any specific talks with Chrysler. “Without referencing this specific rumor, as we’ve often said G.M. officials routinely discuss issues of mutual interest with other automakers,” said the spokesman, Tony Cervone.

There was no immediate comment from Cerberus.

People briefed on the deal said the talks started as an exploration of possible joint venture opportunities between G.M. and Chrysler.

Cerberus acquired an 80.1 percent stake in Chrysler in August 2007 for $7.4 billion from the German automaker Daimler AG.

Under the terms of the deal being discussed, Cerberus would end up owning an unspecified equity stake in G.M.-Chrysler, people briefed on the talks said.

The ramifications of the merger would be enormous in the global auto industry. G.M. and Chrysler together would control more than 35 percent of the United States vehicle market, and be by far the dominant producer of pickup trucks, sport utility vehicles and minivans.

It would also marry such iconic American brands as G.M.’s Chevrolet and Cadillac with Chrysler’s Jeep and Dodge divisions.

However, the potential merger carries enormous risks. Both G.M. and Chrysler are struggling mightily in what is the worst market for vehicle sales in the United States in 15 years.

People close to the discussions said that if the prospective deal did not happen, Cerberus would probably look to Nissan and Renault.

But the marriage of G.M. and Chrysler has far more potential than hitching Chrysler to a foreign automaker. While G.M. and Chrysler may be hamstrung by labor contracts from cutting jobs, the two companies could combine dealers, product lines and advanced vehicle technology.

Bill Vlasic reported from Detroit and Andrew Ross Sorkin from New York. Michael J. de la Merced contributed reporting.

[schaefft]

As I said to Tiberius today, its just sad what is happening in the US. Freaking japs. If a merge of Chrysler and GM is the only way to save these wonderful brands, they should do it. A world without GM - suicide

[cpd]

Originally Posted by schaefft

As I said to Tiberius today, its just sad what is happening in the US. Freaking japs. If a merge of Chrysler and GM is the only way to save these wonderful brands, they should do it. A world without GM - suicide

It's not a matter of those Japanese - it's a matter of the US auto-giants getting their houses in order and building more of what the consumer wants to buy, building it well and marketing it well. It also means taking a rapid de-tox from the poisonous addiction to big SUVs.

I looked at some brand new 3.6L DI V6 Cadillac CTS sedans on Friday night, and the quality of them was shocking - the fit and finish was very poor, especially for cars on display at a motorshow stand (which are usually the best of breed). The glossy plastics on the centre console looked especially cheap and nasty, at odds with the rest of the car, and the faux carbon fibre trim looked about as crook as when Mercedes last used it on the old SLK. Not good enough for the money.

Compared to our local GM brand (Holden), Cadillac has quite some way to go. Holden's panel fit, and interior fit and finish are much better, shut-lines are smaller and more accurate - plus the interior is better put together and using materials of a much higher quality look and feel. It's not quite Lexus level, but it's not bad either.

In my opinion, that's why the big American manufacturers are bleeding so badly, too many big trucks, not enough credible/competitive passenger cars and not a good enough brand image. They need to work on that big time.

Merging with Chrysler won't do that. That's just more dirty laundry to deal with - and more baggage. GM needs to become a much more tightly run ship - with a few global car platforms:

Large sedans/coupes:
- All based from Zeta platform (eg, Commodore, Caprice, Lumina, Buick Park Avenue, Camaro, Coupe 60 showcar etc)

Small sedans:
- All based from the smaller version of Zeta platform (see the Torana show car)

Small cars (hatchback, etc):
- Base them all off the European Opel platforms, such as Corsa/Tigra/Astra, etc)

Sports cars:
- Corvette

They badly need a BMW 3 Series rivalling small sedan that is priced to fight the common-garden-variety Japanese cars, with quality to match the Japanese. The idea already exists with the Torana TT36 concept car of some years ago - although it wasn't designed for that purpose.

In Australia - it badly needs it as well. Commodore has the Toyota Aurion well and truly beaten (as does Ford Falcon), but they need something other than a front-drive Daewoo built Epica to take on Camry. The killer blow would be a 3 Series sized 4 cylinder rear-drive sedan with Commodore like style, and good quality.

[tiberius]

American car companies have lost focus on what makes people buy their cars. Styling, precision ( which at times were good, other times not) and value. if you look ay what you spend on a car you get little for your money. GM sells the Holden Commodore in the US as the Pontiac G8 Sedan- not a bad Idea,just as the GTO is basically a Monaro. Ford on the other hand decided to come out with odd vehicles and change all the names. a great way to confuse its buyers. GM plans to go to rear wheel drive sedans to replace its big sedans may not make it to reality if the market continues in its current state. there are talks here that we may be driving chinese cars here by 2010 everything else seems to be coming from there too.there is even talk of GM selling its detroit headquarters. the foreign market ,especially china is the only area where GM sales are growing, despite a recent slup in china due to market fluctuation.