Chrysler and GM in Merger Talks?

Date 2008/10/12 9:26:43 | Topic: Miscellaneous

Wow - I picked the wrong weekend to go camping! Late Friday news started breaking that General Motors and Cerberus Capital Management (parent company of Chrysler) were in preliminary merger talks. From the New York Times:
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.

...snip...

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.

Numerous reader contacted us about this story, here's a quick sampling of what they are saying:
It's a safe assumption that the Jeep brand would be safe due to history, but it's interesting to consider the Jeep brand and Hummer brand owned by the same company. Additionally, considering GM's ties to the military with the HMMWV and Jeep's long military history could this mean that we could see Jeep producing military vehicles for the US on a larger scale again? Something to think about.

and
Think GM will do to Chrysler what Chrysler did to AMC?....discontinue the car business and keep the Jeep business?

What do you think? Leave a comment and let us know.


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