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GM-Chrysler: A Lemon Of A Deal

From the Editors (2)
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Finally, there is the Jeep brand, which is considered Chrysler's most valuable asset. The fact that an SUV brand would be your most precious possession speaks volumes about how far Chrysler has fallen. But even if you accept that Jeep still has value - which I do - it clearly is in for a rough ride for the foreseeable future. After all, how do you make a Jeep green, other than with a good coat of paint? Perhaps that's one reason why Jeep sales are off by 30 percent this year.

Perhaps what GM is really after is the $11.1 billion in cash Chrysler says it has socked away. Maybe Chrysler's owner, Cerberus Capital Management, might even kick in a few billion more for GM to take its Chrysler wreck off its hands. Cerberus, a private equity fund that seemed to have a golden touch for turnarounds, has met its match in Motown and appears desperate for an exit strategy.

All that cash could give GM just what it needs to make it through to 2010. But it would come at a very steep cost for Detroit and the upper Midwest. Tens of thousands of workers would be cashiered as GM shut down all the duplicate factories, engineering and back office operations. For example, each company has sprawling technical centers in suburban Detroit that employ thousands of engineers, scientists and car designers. One of those tech centers, most likely Chrysler's, would probably close.

But after a short-term cash infusion and momentary market-share boost, what would GM be left with? A mess of a merger that would make the failed DaimlerChrysler alliance look like a marriage made in heaven.

And GM should know this by now. GM seriously explored acquiring Chrysler last year before Cerberus paid $7.4 billion to take America's No. 3 automaker off Daimler's hands. Back then, GM concluded Chrysler wasn't a good fit. Things have only gotten worse for both companies since then. So what makes this work now?

Before GM opened talks with Chrysler a month ago, it reportedly first approached Ford Motor Co. with this mega-merger idea. After some high-level preliminary discussions, Ford Executive Chairman Bill Ford Jr. and CEO Alan Mulally politely declined. Cerberus, though, seems only too happy to discuss unloading its Motown mistake. But GM, which has been selling cars for 100 years now, should recognize a lemon when it sees one. This is one deal that shouldn't get done.

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Member Comments

Posted By: whatdoidonow @ 11/02/2008 8:55:10 AM

comment; I don't think its good for our government to give the money to GM to buy chrysler, if our government would give them the money then it tells me that our government is so stupid. That would make my mind up to move overseas. i wouldn't want to live in a country that a government cares if you live or not. I work at chrysler and i have given 110 % on my job. we have won two awards two years back to back. And now they say that GM wants to buy us. when Cerberus bought us they knew of the gas prices , why didn't they think and start making smaller cars to compete with the others. I know why, its because on trucks and suvs its more money in there pockets . Bigger bucks. now the ceo's and the other big boys have lined there pockets with cash and now they want to run.. what about us working people that helped them fill there pockets.. Doesn't anyone care about us....?????????? AND NOW WHAT WILL OUR GOVERNMENT DO ???????? Does our government care??????? We will see....
Posted By: whatdoidonow @ 11/02/2008 8:53:59 AM

comment; I don't think its good for our government to give the money to GM to buy chrysler, if our government would give them the money then it tells me that our government is so stupid. That would make my mind up to move overseas. i wouldn't want to live in a country that a government cares if you live or not. I work at chrysler and i have given 110 % on my job. we have won two awards two years back to back. And now they say that GM wants to buy us. when Cerberus bought us they knew of the gas prices , why didn't they think and start making smaller cars to compete with the others. I know why, its because on trucks and suvs its more money in there pockets . Bigger bucks. now the ceo's and the other big boys have lined there pockets with cash and now they want to run.. what about us working people that helped them fill there pockets.. Doesn't anyone care about us....?????????? AND NOW WHAT WILL OUR GOVERNMENT DO ???????? Does our government care??????? We will see....
Posted By: cpgne @ 10/23/2008 8:15:57 PM

I don't see a future for Detroit in the U.S.. They should just hang it up here, and continue their more profitable overseas business. Maybe they can keep a couple of plants open here, in case some day they come up with some winning designs and can import them here from overseas, doing final assembly here to avoid the "chicken" tax. They have fallen way too far behind here to catch up. By the time the GM Volt comes out, there will be three competitors that outperform it for less money. The U.S. passed laws many years ago that will keep GM, Ford and Chrysler from ever being competitive on a worldwide basis if they continue manufacturing in the U.S.. Better cut it short and stem the flow of blood now, before they sink it completely.