Chrysler to combine with General Motors?

 

It's no secret that American automakers General Motors Corp. and Chrysler LLC have had sales and profitability problems in recent months. But according to the New York Times and Wall Street Journal, the companies have spent more than a month discussing a merger or takeover.

Neither automaker would either confirm or deny the two publications' accounts, which differed in their details but had the same message: the Big Three automakers may soon become the Big Two.

But who would such a move benefit?

GM and Chrysler both have many redundant products even as separate entities, and both have many slow-selling products.  Furthermore, Chrysler's market position is worse than GM's because their product portfolio is made up of bottom-dwelling mediocre and rarely strong-selling vehicles. They recently unveiled ambitious electric concept vehicles and they have the most popular minivans on the market while GM just killed off its slow-selling Chevrolet Uplander. The companies have already collaborated on gas-electric hybrid technology, which they have rolled out in their full-size SUVs.

However, it would seem that this deal would be most appealing to Cerberus, Chrysler's parent company that picked it up little more than a year ago from Daimler, with which Chrysler had merged ten years earlier. With all auto sales collapsing and Chrysler as a poor performer even before the current economic conditions, Cerberus seems to be looking to separate itself from the automaker.

The New York Times said the two companies were discussing plans to merge. The Wall Street Journal said Cerberus was looking to trade Chrysler to GM in exchange for the GMAC financing provider.

Sources to the Times said there was a 50-50 chance the companies would combine. What that would mean, and what the automakers would gain from it, would remain to be seen.