MotorAuthority

Chrysler still sees GM merger as best bet

Posted Fri Feb 20 2009 8:13 AM by Ralph Hanson

Chrysler sees a partnership with GM as necessary to become a true competitor for companies like Toyota

Desperate times call for desperate measures and at Chrysler it appears every option is on the table. The Auburn Hills carmaker has been tied with at least five major carmakers in the past six months, even coming close to a merger with Detroit rival General Motors. While such a move may seem a little like the blind leading the blind, Chrysler in its latest viability plan said it still believes a partnership with GM is the "best option for the U.S. auto industry."

Speaking with Bloomberg, Chrysler spokesman Stuart Schorr explained that a GM tie-up “would create a company better positioned to compete with Toyota and other non-U.S. automakers.”

But remember, this is the same company negotiating with Fiat over a 35% acquisition and technology sharing deal. The message being sent to the U.S. Treasury and the Obama administration, however, is that both GM and Chrysler may be dead if they continue to proceed alone.

Chrysler's hope is that with enough prodding, the government may force some kind of an alliance with GM but right now nothing is confirmed. The Obama administration is currently contemplating lending GM and Chrysler a combined $21.6 billion in new loans, and this ultimately could lead to the government persuading GM into an alliance.

The key word here is persuade as GM previously pulled out of alliance talks with Chrysler, citing a desire to focus on its own survival as the main reason. At present both GM and Chrysler claim they are not looking at renewing partnership talks but if such a move is ideal then it may fall on the government to decide upon. So far the Obama administration hasn’t signalled what direction it might take but there’s no doubt that some major changes and restructuring are on the horizon for the U.S. auto industry.

Story Tags:

• Cerberus
• Cerberus Capital Management
• Chrysler
• Chrysler viability
• Detroit
• Detroit 3
• General Motors
• GM
• GM-Chrysler Merger
• Industry
• Merger
• Obama adminstration

Reader Comments

• Tue Oct 21 2008 12:30 AM

  NoNameDenton says

  Dumb and Dumber 3

• Fri Dec 5 2008 9:58 AM

  Jim says

  Time for Cerberus to sell Chrysler to Irwin Jacobs (if he's still alive) and let Irv the Liquidator do for Chrysler what he did for AMF. Seems to me most of those brands are doing quite well and at least one, Harley Davidson, have been blow out successes.

• Fri Feb 20 2009 9:49 AM

  TrelinDTR says

  Chrysler will be torn apart if they merge with GM. GM will take the reigns and kill of Dodge and Chrysler, leaving Jeep to submit to its mauling.
  
  Chrysler showed really promising products, especially the new 300 and the Grand Cherokee...Just try to drop as many vehicles are needed.
  
  Chrysler needs to work, very much like GM's GMC, Buick, Pontiac dealers
  
  Each brand offer only CERTAIN types of vehicles.
  Jeep offer only SUV's
  Dodge only offer Light and Heavy duty Trucks and sports cars
  Chrysler offer more of a entry to mid-level luxury saloons and coupes
  
  I would have to see GM take Chrysler...

• Fri Feb 20 2009 4:58 PM

  NoNameDenton says

  This is still a bad idea, Chrysler, shut up, you may offend Fiat, the only company interested in you

• Fri Feb 20 2009 8:31 PM

  adamk says

  Cerberus: without Fiat, your only mildly valuable Chrysler assets are Jeep and minivans. I can't imagine you'd get a better deal from GM with government prodding, compared to the traditional private equity "strip and flip." surely there must be a Chinese company with more liquid cash than GM?
  
  Spurn Fiat and you will be truly exposed as a one (perhaps one and a half) trick pony.