The Wall Street Journal reports (subscription required) that General Motors (NYSE: GM) and Chrysler have reopened merger talks after Cerberus Capital Management, the company in the unenviable position of owning Chrysler, announced its willingness to give up part of its stake to get a deal done.It's a nice public relations move designed to make it look like the company is doing its part to get a bailout done, but that's about it. Daimler AG, which still owns just under 20% of Chrysler, has already said that the equity in the deal is now worth zero. So Chrysler is trying to toss in nothing and call it a concession. Cerberus has still not indicated a willingness to pump any more cash into Chrysler -- that's the taxpayer's job!
Meanwhile, Chrysler shut down its factories for a month to conserve cash. The company is also socking it to its dealers with tighter terms. Dealerships will be fined (subscription required) for any new cars that languish on their lots for more than 360 days and will have to pay off the balances on any used cars that remain unsold after six months.Given the way the car industry is right now -- with many dealers losing huge sums of money as they struggle to stay in business -- this could put more than a few dealers out of business. But given the number of dealers that the domestic car companies have relative to their foreign counterparts, that's something that will have to happen eventually anyway.
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Reader Comments (Page 1 of 1)
12-18-2008 @ 2:45PM
Tony said...
Really Great! A merger of GM and Chrysler? Since when does two loser companies produce one good company in a merger.
12-18-2008 @ 12:10PM
Terry said...
Chrysler Co. is now worthless. Daimler should donate their 20% of the company to the "bailout" if Chrysler gets any taxpayers money. Also, Chrysler is still building too many models of cars that Americans don't want. I do like Chryslers ability to take a vehicle from prototype to production in a very short time. GM and Ford could learn from Chrysler.
12-26-2008 @ 10:33PM
Mike said...
I used to be a supporter of Chrysler and their products - until I rented a Sebring.