It probably made sense and has for at least a year. General Motors (NYSE: GM) and Chrysler have had merger talks, and probably had them recently. The largest car company in the U.S. has been speaking with Chrysler's owner Cerberus.The conversations may have been slowed by the wild stock market.
According to The Wall Street Journal (subscription required), "Uniting two of the country's Big Three auto makers would prove a watershed for an industry knocked down by high production costs and a looming recession."
But the plan may not work. GM and Chrysler both appear too weak position to weather the bad economy, even together. Analysts believe that GM will be low on money next year, and Chrysler is no better off.
What would make sense is that Chrysler makes a good merger partner for Honda (NYSE: HMC) or VW. Both would like a larger market share in the U.S. Both have strong balance sheets, and both could rip out duplicate costs.
Putting together two troubled U.S. auto operations gains very little for either company.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
10-11-2008 @ 1:37PM
JCH said...
Well, I like Honda, and cannot imagine them linking up with the dullards at GM.
Honda, to me anyway, is a natural for Ford.
10-11-2008 @ 1:58PM
PHIL said...
LOL LOL SOME MORE OF THE B.S. GOING AROUND ! I LOVE THE WAY WALL STREET TALKS LOL THEY MAY BE DOING A JOINT VENTURE LIKE IN DRIVETRAINS AND SO ON BUT THIS IS JUST ANOTHER FART IN THE WIND BY THE SO CALLED ANAL-YST.. I USE THIS TURM BECAUSE THE ANAL-YST NEVER SAW THE DOW A 85OO ? AND FALLING LIKE A ROCK .. THIS ECONOMY WITH THE BROKE BANKS IS GOING TO CATCH UP WITH TOYOTA AND HONDA. IF YOU PEOPLE HAVE NOT NOTICED ! WALL STREET AND THE BANKS ARE BROKE! AND THERE IS NO MONEY OUT THERE .. DAAAA
10-11-2008 @ 8:41PM
Blabrmouthdotcom said...
Bad move for GM, much needed move for Cerberus. Cerberus and Nardelli are running the company into the ground. If they stand around and do nothing much longer, the only thing Chrysler will have left is the name on the door.