GM & Chrysler Merger Back on the Table

Chrysler, GM CEOs: Would Consider Merger As Part Of Loan Deal

December 04, 2008: 03:19 PM EST
DOW JONES NEWSWIRES

The chief executives of General Motors Corp. (GM) and Chrysler LLC said Thursday they would be open to a merger between their two companies as part of a U.S. federal bailout package.

GM's Rick Wagoner and Chrysler's Robert Nardelli were responding to a question from Sen. Robert Bennett, R-Utah, who suggested that a merger would save the companies billions of dollars. Bennett floated the idea of a merger as a condition for receiving federal aid.

http://money.cnn.com/news/newsfeeds/articles/djf500/200812041519DOWJONESDJONLINE000999_FORTUNE5.htm

And here we thought the merger idea was dead. I'm not sure I'm comfortable with this one. For instance, which truck survives, the Ram, the Silverado/Sierra, both? :think:

probably the Silverado..

but if you are going to play like that...

Charger or Impala?

Avenger or Malibu?

etc etc

That was Bennett's idea. He's just one guy.
I didn't get the impression that any other Senator were thinking along those lines.

The CEOs were just agreeing to every question or scenario that different Senators were laying out.

GM is truly desperate and even they couldn't make a deal with Chrysler with Cerberus and some banks practically holding a (GMAC) gun to their head. I agree they are trying to look open to anything in the face of Senators with billions of their lifeblood dollars at stake. But this deal would bury both and they know it.

GM needs to get rid of their crappy brands; Not gain three more crappy brands.

one of the other senators was saying that a merger or buyout shouldn't be allowed if there is a bailout

probably the Silverado..

but if you are going to play like that...

Charger or Impala?

Avenger or Malibu?

etc etc

That's easy. Say goodbye to Dodge anything and hello to Chevy Caravan.

Hello Jeep, Caravan and sell the ram to Nissan.

How about Sen. Corker from TN saying to Nardelli:
"You guys KNOW you're not going to be around much longer".

Nardelli was taken aback and a bit angered about that comment.

After watching Corker twice now, there's two conclusions I've drawn about him:
1) he just wants the unions to die
2) he is a d**khead


And Senator Shelby from Alabama. It was clear he didn't read any of the new presentations. When he would ask a question, the CEOs (and I remember Nardelli saying specifically) would respond with a statement like; "if you go to tab 10, page 17, you will see all the info you are asking for". And then after that he was just left sitting there, not saying anything, looking like a dolt.

These politicians need to be trained to think "American job benefits" when they hear UAW. Then they'll change their view a little.

I knew this would come up.

True on Corker.

And Shelby is just a hypocrite.

probably the Silverado..

but if you are going to play like that...

Charger or Impala?

Avenger or Malibu?

etc etc

Easy:

Charger, with the 3.6 DI
Malibu, Avenger is not really avenging anything.

There is too much capacity in the US right now, and frankly there are far too many makes and models in market segments. Merging Chrysler with another manufacturer wouldn't fix this unless a big axe is taken to the company. In the case of a merger with GM, it probably makes sense to:

1) Retain the minivan and RWD large-car business
2) Replace Hummer with Jeep
3) Eliminate nearly every other Chrysler product line

GM would need to do this while trimming its own fat. That's a lot of work to do while dealing with the current business environment.

From an overall industry standpoint, it makes far more sense to merge Chrysler with a strong player, someone who can make the necessary improvements to the company's product and structure - but if that happens, then the cuts at GM and Ford would simply get larger, because there's not really enough customer demand to supply a strong Big 3 and all the transplants.

a merger should be on the table but it has to be carefully constructed and well thought out.

It must address alot of issues in order to be beneficial. Which brands, cars, etc survive the change is gonna be so unpredictable.

All three of the Detroit CEOs, especially Nardelli know that Chrysler is going to die and be merged with somebody; the only real question is "who".

Chrysler's owners don't seem to be willing to put one more penny into the company; they are just hanging around for a buyer; as such, there shouln't be one penny of tax dollars given to Chrysler just to make them look better to a potential partner although the marriage, whoever the other party turns out to be; shouldn't be mandated by Congress.

How about Sen. Corker from TN ...
Senator Corker was the one person making sense in those hearings yesterday - he has it exactly right (for a change).

These companies need to make “Chapter 11” style concessions as a prerequisite to getting any taxpayer assistance; nothing short of that sort of reorganization is going to save Detroit.

Corker’s recommendation is spot-on…it would allow Detroit to do a “Chapter 11” type of reorganization without the stigma and negative consequences of actually filing a Chapter 11 bankruptcy…it would put them on financial par with their foreign competition and allow them to become financially stable; even with a depressed TVM.

Of course, the Detroit Three CEOs are never going to say it publicly but privately, I'll bet every one of them would like to do a Chapter 11 reorganization and get rid of the UAW (or at least relegate them to the level of impact/importance they should have on Detroit Three's business).

It’s an opportunity for Detroit to erase 50 years of bad decisions and still retain a Detroit auto industry.

Corker NEVER made that recommendation. It was from a Senator earlier in the hearings.
All Corker did was attack the UAW and attack Chrysler.

And the UAW was receptive to that recommendation as long as ALL parties were brought to the table and EVERYBODY shared in the sacrifices.
And that's a good point. Where's management in all this? Where's the dealers? Where's the suppliers? Where's the creditors? Why weren't any of these people at these hearings?

They had one guy from the CT dealer's assoc. Where was the head of NADA? And one guy from one supplier. I'm sure they have a supplier assoc. Where was the head of that group?

It is clearly lopsided.

Corker NEVER made that recommendation. It was from a Senator earlier in the hearings.
All Corker did was attack the UAW and attack Chrysler.

And the UAW was receptive to that recommendation as long as ALL parties were brought to the table and EVERYBODY shared in the sacrifices.
And that's a good point. Where's management in all this? Where's the dealers? Where's the suppliers? Where's the creditors? Why weren't any of these people at these hearings?

They had one guy from the CT dealer's assoc. Where was the head of NADA? And one guy from one supplier. I'm sure they have a supplier assoc. Where was the head of that group?

It is clearly lopsided.
:confused: Maybe we aren't talking about the same Senate heraings yesterday in which Corker said...

“At today's hearing I suggested a number of very specific and rigorous measures that should be in place before we even discuss making a loan to any of these companies.

• “One, give existing bondholders 30 cents on the dollar to help reduce their overall debt load.
• “Two, bring wages immediately in-line with companies like Nissan and Volkswagen.
• “Three, GM owes $23 billion to the United Auto Worker’s VEBA (voluntary employees’ beneficiary association) account. The union must agree to take half of that payment in GM stock.
• “Four, the union must agree to do away with payments to workers who are still receiving almost full compensation up to four years after their jobs have ended.

“These are the same types of conditions a bankruptcy judge might require to ensure that these companies become viable and sustainable into the future, and if they will agree to these terms then we have something to talk about. The process I have suggested would allow them to avoid the problems and stigma that accompany a formal bankruptcy, while forcing them to do the things they need to do to be successful companies.”

As to your NADA/Supplier/etc. comments, what exactly do you think suppliers and dealers are supposed to do? What is it that they could do that would in any way help GM of Ford or Chrylser make more money on their product?

I'm not saying dealers and supplier and the reast aren't important to the entire "car buying" process but they have little to do with Detroit's problems and little they could do to help.

Dealers and suppliers are already dropping like flies...I'm not sure what sacrifices you think they need to make that would make things better??? :shrug:

And the UAW was receptive to that recommendation as long as ALL parties were brought to the table and EVERYBODY shared in the sacrifices.

That statement makes very little sense. Why should everyone share in the sacrifices, when only one group of people (UAW) are getting disproportionately higher wages and benefits than their counterparts at other companies eleswhere in the industry?

That statement is packaged in a nice little way to make it sound good at first until you think about it for a minute.

I was unable to watch the hearings because I was at work and can get in trouble for excessive personal internet use, but I found this article gave a good summary of the hearings - http://www.christonium.com/automotive/ItemID=12284939913205

I found this blog several months ago and enjoy the author's insight.

There is too much capacity in the US right now, and frankly there are far too many makes and models in market segments. Merging Chrysler with another manufacturer wouldn't fix this unless a big axe is taken to the company. In the case of a merger with GM, it probably makes sense to:

1) Retain the minivan and RWD large-car business
2) Replace Hummer with Jeep
3) Eliminate nearly every other Chrysler product line


With the RWD Chrysler platform, GM would have a ready replacement for the DTS.

Every other Chrysler automotive platform is a problem that Chrysler needs to fix. The Ram could be sold to Nissan, so that they'd still have the replacement Titan.

GM merges with Chrysler, guts 90% Chrysler for it's assets, offers some jobs to the white collar workers and the Challenger becomes non-existant non-competition for the new Camaro.