Bill Vlasic and Andrew Ross Sorkin of the New York Times revealed that General Motors has been in talks with Cerberus, majority holders of Chrysler, over the past month about merging the two corporate giants together. You read that correctly. So while GM was celebrating its centennial in full swing just last month, talks were already underway in a merger. Mr. Vlasic also reports that GM first entered merger talks with Ford Motor Company in July, 2008. Ford eventually walked away from the negotiating table, believing they would be better off on their own.Ã‚Â
General Motors is losing billions. Its stock is trading at the same price it was in 1950. GM has denied rumors that it would file for bankruptcy, but you have to wonder how much more this once mighty corporation can withstand.
Cerberus is a private company, but it is no secret that Chrysler is suffering terribly with a truck/SUV heavy line-up that are not selling, subpar midsize passenger car offerings, and virtually nothing to offer the consumer seeking a small, fuel efficient car. As a car guy, I love the Viper. I think its great that we have the 300C and the Challenger SRT/8. Exciting cars, yes, but not the cars that keeps a company this size afloat.
It should be noted that Chrysler has already struck a deal with Nissan. Chrysler will build Nissan a pickup truck, and in turn, Nissan will provide Chrysler with a small car. As you would expect, Cerberus management are coy with their intentions. They are talking to GM and Nissan/Renault, so I would not anticipate any news coming from them until something actually happens.
If any deal were to take place, it is several weeks away. The NY Times calls the chance of a GM/Chrysler merger 50/50. The ramifications are massive. The US government may intervene for anti-trust laws. The union labor issues alone are impossible to disseminate here. More factories would be made redundant, and the dealer landscape as we know it could change drastically.
That’s the business side of it, but this is The Garage-we’re car people. By themselves, we have seen Chrysler lay to rest the Plymouth brand. For GM, they put Oldsmobile to bed, and rumors are percolating that either Pontiac or Buick could potentially be shut down. A merger of GM and Chrysler would be chock full of redundancies. How could Jeep and GMC co-exist? With no unique model to itself, it is difficult today to even justify GMC’s existence.
Yet, and hear me out-there could be an upside. GM abandoned the minivan market completely, but Chrysler still owns that segment. Chrysler’s SUV’s are generally awful beasts, so no one would really miss them in place of what GM has. GM’s crossovers are also getting accolades, while this is an area that Chrysler just left when it discontinued its Pacifica. The Dodge Journey crossover is a smaller vehicle that doesn’t compete directly with the General’s current crossovers.
I could go on and on, but you see what I mean. I think people would be sad to see the Chrysler 300C Hemi leave us, but would anyone shed a tear for the Buick Lucerne?Ã‚Â
The bottom line is both automakers are saddled with some car and truck models few buyers have much interest in. As a car guy, I want to see the Big Three survive as the Big Three. The consumer always benefits when they have a choice. But this is capitalism. The weak will fall. It is up to these companies to build cars that people want to buy. I know Bob Lutz at GM gets that. Everyone who has a hand in this needs to understand that.
A merger of Chrysler and GM brings little benefit to the North American consumer. The question now is, is it just too late to prevent it? Are they that far gone? Competition breeds better cars. Neither company has delivered this, and now, I am afraid, we are truly seeing the catastrophic results.