General Motor Chrysler Merger Talk Heats Up Again?

As recently as October, General Motors and Chrysler were actively talking about merging operations as the two automakers explored ways to overcome tough market conditions while cutting back on expenses. Though the talks were considered to be serious, GM broke them off in November when it became apparent that funding would be an issue. Quite apparently, GM realized that the automaker didn't have enough money to purchase Chrysler LLC let alone fund their own operation.

Fast forward two months and talk of a merger has resurrected. This time, the conversation was initiated by federal lawmakers who have brought up the possibility of requiring the companies to merge in exchange for receiving federal funding. With Chrysler, GM and Ford each asking for billions of dollars in loan money, lawmakers are attaching strings to loan guarantees, with one of them quite being a merger.

A merger of GM and Chrysler would instantly create the world's largest automakers, but with some conditions: the combined entity would be required to pare back its operation, laying off tens of thousands of white and blue collar workers, shutting down excess capacity and closing down a number of brands. GM would probably lose or sell off Saab, Hummer, Saturn, Pontiac and GMC while Chrysler and Dodge would shut down and Jeep kept going.

With Chrysler and Dodge out of the way, there would still be some familiar products from those divisions which would carry on, but under other brands. General Motors has long been interested in Chrysler's minivans, therefore those products could be given a reprieve. In addition, the Dodge Ram truck could replace the current GM trucks or be sold off to Nissan as that automaker might be interested in the technology for its next generation Nissan Titan.

A less drastic merger would have the combined entity keeping all brands, but slowly divesting itself of Saab and Hummer while scaling back Pontiac and Dodge to niche brands. Likely, Chrysler and GMC would not survive while Saturn could also be closed or forced to merge with its European cousin, Opel.

No final word on the outcome of a GM and Chrysler merger is expected until Congress wraps up its hearing later this week. For now, Ford looks as if it will continue with its plans and, with an injection of taxpayer money, be given an opportunity to ride out the current crisis to fight another day.

At the very least, the times we are living in our interesting, one that promises change no one would have seen coming just a few months ago.

About the Author

Matthew C. Keegan is a freelance writer who resides in Cary, North Carolina. Matt is a contributing writer for Andy's Auto Sport an aftermarket supplier of quality parts including neon frames and taillight trim.