Auto Manifesto

October 18, 2008

GM/Chrysler Takeover/Buyout/Merger

A day later and it still doesn't seem like a good idea for GM. This article goes into a little more detail about the cash GM would get from Chrysler's coffers, which would be advantageous in the tight credit environment that currently exists. Let's be real. That $11 billion isn't going to save a company that is burning $1 billion per month, especially after it absorbs another company that's also bleeding. What's that going to buy? Another 6 to 12 months?

It seems like the real end game would be to create a company that has so much impact on the American economy, whether real or perceived, that it would not be allowed to fail. By merging the two they would have further bargaining leverage with governments, suppliers, and dealers, as well as the ability to drastically reduce industry capacity. That would (perhaps) help hasten a recovery by bringing supply more in line with demand.

However, I still think it's a bad idea and that adding two companies in crisis isn't going to result in anything but a big stinking pile of you-know-what.

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