Soon, America’s Big Three automakers could be down to two. According to The New York Times, General Motors and Chrysler have been in negotiations about a merger for some time and there is a “50-50” chance a deal will be struck.
The news comes at a time when the U.S. auto industry is in serious trouble. A weak economy and tightening credit standards are significantly hurting sales. rising gas costs have also hurt the industry as demand for SUV‘s - once Detroit’s cash cow - plummets.
GM has lost $18 billion this year, and its stock fell 45 percent last week to a 60 year low. Chrysler’s sales have dropped 25 percent on the year. Since 2006, Detroit’s Big Three have cut 100,000 hourly jobs, leaving only 130,000 blue-collar jobs in the U.S.
With these dismal postings, many analysts believe that bankruptcy is imminent for the two companies. At the current rate neither company will have enough cash to operate in 2010. The merger talks may be a last ditch effort to stave off failure.
GM had been in talks about a possible merger with Ford as recently as July. Chrysler has also had talks with Nissan motors of Japan and Renault of France.
Source The New York Times:
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Before General Motors began exploring a possible merger with Chrysler — talks that first came to light on Friday — G. M. proposed a similar deal with its other cross-town rival, the Ford Motor Company, two people with knowledge of the talks said Saturday.
G. M. executives approached Ford about a possible merger in July, but Ford rejected the idea and ended the discussions last month, these people said. |