GM & Chrysler discuss merger and/or acquisition...

[dd74]

Whoa! And I thought GM's sort of...well...broke.

http://enews.earthlink.net/article/top?guid=20081010/48eed340_3ca6_1552620081010421103365

[HardDrive]

Newflash!

GM and Chrysler merger complete. Blackhole of sucktacularness opens in the center of Detroit. Demons seen pitching Cordobas and Azteks at passers by! Collective yawn heard from around the country.

[Porsche-O-Phile]

A true formula for success! The company that only knows how to build rebodied pickup trucks marrying the company that Daimler vomited up only two years ago. Brilliant! I can't wait to see the design gems that this merger produces. It's gonna' be pure vehicular comedy gold.

[dd74]

Mercedes quoted as saying of the merger, "Scheissekopfs!". Now said to seek purchase of Cadillac from GM as "...a BMW destroyer."

[jyl]

I don't understand the rationale for such a deal. Both GM and Chrysler basically need to make the same turnaround: offer better products, shrink manufacturing capacity, cut worker compensation and retiree costs, reduce dealer networks and eliminate weaker nameplates. If either of them does this, they can survive - GM certainly has the necessary scale. It won't be easier to do this as a merged company, the integration alone will take multiple years.

And GM does not have that much time. I think GM only has about a 1 year window to do the turnaround. GM has been burning >$1BN/month and might have about $18BN of cash right now (was $22BN in June). With new car sales as poor as they are, the cash burn might be closer to $2BN/month. To $18BN cash now , add $3BN drawn from credit lines, add $10BN (guessing) of federal loans, subtract $2BN for Delphi, that's $29BN. Ignore mortgaging the HQ, that won't raise spit ($0.3BN?). So, at this rate, in about 1 year, GM will be effectively out of cash.

Perhaps GM should get the federal loans, draw down all remaining credit lines, and then immediately file bankruptcy. Use BK to wipe out retiree medical benefits, cease supporting pension (doesn't mean retirees will get zero, depends how funded the plan is), restructure debt, close factories and lay off a significant part of the workforce, cut pay and benefits for remaining workers, if possible tear up dealer contracts and shrink the dealer network. Better to do it when they have $25-30BN cash then in a year when they have $5BN.

[onewhippedpuppy]

Honestly, GM is the closest to turning it around. Chrysler is the farthest. Chrysler almost pulled Mercedes under water, they would be the final anchor around GM's neck.

Go walk through a showroom and look at domestic cars. GM is by no means Toyota, but they have made HUGE strides in the last 5 years. Their cars aren't typically #1 in their markets, but they can compete. It's the same old thing at Ford, and Chrysler seems to only be getting worse. If I had to bet on one of them turning around their company, it would be GM simply because they are starting to make pretty good cars.

[turbo6bar]

The merger assures Chevrosler will be too big to fail. Paulson needs time to draft a cash-for-cars program. Guys, outside of the box thinking, OK?

[jyl]

Originally Posted by onewhippedpuppy

If I had to bet on one of them turning around their company, it would be GM simply because they are starting to make pretty good cars.

Even if GM is making pretty good cars (?), they need to make money on those cars, in a 12MM SAAR environment.

[onewhippedpuppy]

True, but making cars that are worth buying is the first step. Don't talk trash until you've looked at a few. The new Saturns (many from GM's European brands) are pretty good, the new Malibu is competitive, the crossover SUV (Enclave/Acadia/etc) has the best combo of space and MPG in it's class, the Corvette is a bargain, the Sky/Solstice are attractive and decent to drive, CTS is very nice, their trucs are excellent, and the G8 has serious HP for not much money. Fit/finish aren't Lexus, but in most cases are very near to Japanese levels. They have made HUGE strides in the last 5 years. Most of their products are now at least mid-pack in magazine comparison tests. Of course, I'd argue that to really turn around their company, they need to sell class leading products for less money, but at least they're showing improvement.

[carr914]

I'm sure that if this happens, Nardelli created a great big Golden parachute for himself. 1st, he screws up GE, next Home Depot - where he fired himself and got close to $200mil. He doesn't know anything about anything, much less the Auto Industry. All he knew was the greed that he saw @ Chrysler.

T.C.

[jcommin]

Outside of retention bonuses, golden parachutes for the Corporate guys, what does Chrysler have that GM doesn't or need? If they want a Hemi so bad, they should build one. Chrysler's mini van is better too, but so what - the market is moving away from big vehicles. I don't get it??

The only survivors in the auto business will be the ones that can make a quality product/part at the lowest selling price, with zero defects, low labor cost, built in efficient running plants and the most important, make a profit.

[onewhippedpuppy]

GM killed off it's minivans, and Chrysler has cut production of theirs. The Honda Odyssey and Toyota Sienna are still selling well, but are so superior to the Chrysler it's not even funny.

[Nine17]

This news isn't just about GM and Chrysler. It's about Cerberus wanting to get their hands on the other 49% of GMAC. Why? Because GMAC has a bunch of mortgage debt that can be sold to Hank Paulson and then turned profitable as a financial services company. Picking the bones of the dead is why it is no coincidence that Cerberus is named for the three-headed dog guarding the gates of Hades.

GM and Chrysler are effectively bankrupt. Together they can threaten to eliminate hundreds of thousands of jobs and to dump massive pension and health care obligations on the taxpayers. Combined they can extort the next President and the Congress for a bail-out that will make the 2 trillion Paulsen and Bernanke are spending to save their Wall Street cronies' country club memberships look like chicken feed.

This deal sounds like quite a synergy to me...

[Britwrench]

Maybe Toyota will buy GM and claim the GMAC bailout?

Back in the real world, Ford, GM and Chrysler have limited future in the automotive world.
If, and only if, they could talk with each other then they may survive.
Badge engineering and better (or just some for a change) marketing is their only chance.

My personal proposal:

Hummer: stop production now.

Ford/GM/Chrysler trucks, rationalize production, use one type of frame/engine/trans with different bodies. ALL to be made in the USA

Corvette: It is a great car, but sold by Chevrolet dealers..make is a stand alone brand in decent dealership shops that have enthusiasts (who are business aware people) working there.

Ford Crown Vic: It's still a good police/taxi, move ALL production to the USA and make a diesel (MB Blutech or Range Rover ?) or factory CNG options.

Buick/Cadillac: Two makes in one dealership.

Saturn: Needs more dealerships, but importing EU made high-volume (but not enough) cars is not a long term concept.

Ford Focus: Bring in the EU model, but make it in the USA not Mexico.

Ford/Chrylser mid range cars: Forget and stop production, make the GM current mid range
the selling vehicles.

Jeep: Cut out the non-selling models. Jeep is a name with selling abilities. No reason it could not compete with Range Rover/Lexus/MB.

SUV range: Definite merge of ranges, include MB Blutech or similar diesel availaibilty.

Small pick ups and vans: Not really available any more, I think they should be.

UAW: A long talk about the real world and their future might help.

Get the managements of the companies out of any sort of control and get people in who are both car people and have a business brain, with emphasis on the long- term. Which is NOT when they qualify for a big golden parachute and pension.

GET RID OF RICK WAGONER FROM GM HQ ASAP.

When they have all that ability, it's not good to see it slowly, although not all that slowly at the moment, slide under the waves of financial self-made crisis.
Mark

[svandamme]

so gm has what 260 000 employees? Chrysler has 130 000 ?

unions will have a field day running the merged company into the ground

[Britwrench]

Ford, Chrysler and Gm have all sent letters to hourly employees in the last couple of years with the options, which basically are: if the employee is close to 50 it's the time to leave.

Right now.

[svandamme]

and i suppose their 401k's ain't really all what it's supposed to be , right?

[SpartanToJo]

Originally Posted by svandamme

so gm has what 260 000 employees? Chrysler has 130 000 ?

unions will have a field day running the merged company into the ground

Whoa, those are OLD figures. Chrysler has about 70K now. I do not have a figure for GM as I do not work for them. Yet.

[Britwrench]

Quote:
" and i suppose their 401k's ain't really all what it's supposed to be , right?"

There are some beneifts, a good friend has family working for Ford; part of the proposal (and I believe this also for GM) is you can take a "severance pay" and that is it, you walk away.

Some of the other benefits are still offered, but it basically comes down to if you are 50 and older, working for Ford/GM/Chrysler is not a long term option anymore.

If the GM/Chrysler merge goes forward, there will be less hourly-paid employees and the possibly more outsourcing of manufacturing in non-UAW plants (or countries).

The Dodge and Chevrolet dealers in Seattle are already gone, down to one of each and no longer in the city anymore. One Dodge dealer only in the Seattle suburbs.

[Zef]

Cool...The two worst car maker togheter.....