GM to ask US Treasury help fund the GM-Chrysler merger
General Motors Corp., the largest U.S. automaker, has asked the Treasury Department for financial aid to help complete a merger with Cerberus Capital Management LP’s Chrysler LLC, two people with knowledge of the matter said.
Treasury Secretary Henry Paulson would prefer any assistance to come from the $25 billion low-interest loan plan for the auto industry to build more fuel-efficient vehicles, not the $700 billion bailout of the banking system, said the people, who asked not to be identified because the talks are private.
Federal aid may boost cash for the money-losing automakers while they await merger savings that analysts have said may take months to realize. The U.S. auto market may shrink this year to the smallest since 1993 as the credit crunch and a slowing economy crimp demand.
America’s tax dollars hard at work…
GM Said to Ask U.S. Treasury for Aid in Chrysler Merger Talks - bloomberg.com
October 26th, 2008 at 7:26 pm
http://online.wsj.com/article/SB122506556122670509.html?mod=testMod
Bankruptcy Fears Rise as Chrysler, GM seeks Federal Aid
Wall Street Journal, Oct. 27
This is the Wall Street Journal’s more thorough take on the Bloomberg News article posted by Site Admin. Absorb its first paragraph to get a grip on the gravity of the situation.
October 26th, 2008 at 7:40 pm
I say not only no, but hell no!
October 26th, 2008 at 7:46 pm
Off the topic, but there was a story in today’s edition of the St. Louis Dispatch. I knew that Chrysler got screwed in the the whole Daimler deal, but I didn’t realize how much after reading this story.
After reading it makes me sick to my stomach.
When I was younger (teenager of the 80s) I dreamt that one day I might aspire to a benz. After the split up, I realign my loyalty to buying American as best as I can. I will never again dream of owning a Benz.
———-After 73 years as an independent company that once staved off bankruptcy using government loan guarantees, Chrysler sold itself to Daimler-Benz in 1998 for more than $37 billion. In that year Chrysler posted $4.9 billion in operating profits, making itself an appealing partner for Daimler-Benz.
The alliance with Mercedes-Benz’s German parent was supposed to be a “merger of equals” to create an international auto superpower. Daimler-Benz would receive a big stake in the U.S. market, and Chrysler would get the international presence it wanted and some access to Mercedes’ luxury platforms it needed.
But the union didn’t turn out as smoothly as planned.
Daimler and Chrysler shared little technology, plenty of rivalry and too few joint decisions, said Joe Phillippi, president of AutoTrends Consulting in Short Hills, N.J. Daimler-Benz called the shots for the overall venture.
“The joke was always, How do you pronounce ‘DaimlerChrysler’?” Phillippi said.
The punch line: “Daimler.”
When Chrysler’s profits started falling, the relationship soured even more, Phillippi said.
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Here is a link to the entire story.
http://www.stltoday.com/stltoday/business/stories.nsf/business/manufacturingtechnology/story/8e38f91d52343ec0862574ed000b76fd?OpenDocument
October 26th, 2008 at 8:31 pm
Makes me sick! It should be against the law to make these kinds of deals without the strictest regulations and protections for the American worker. The American people and the American worker got screwed in this deal. But were they even consulted? No! Only the stockholders, who were driven by their own short-term greed. Well, they got what they deserved, but it is the American worker who always gets screwed in these deals. No more taxpayer money should go to these companies. The government doesn’t bail out my mortgage, car loans, etc.
October 27th, 2008 at 8:05 am
How can you have a private conversation with the treasury when your talking about using public funds to bail out your business?
The other thing that really gripes my peaches is do McCain and Obama really expect us to believe that either one of them aren’t going to raise taxes on everybody when they get into office?
The money has got to come from somewhere and I have a pretty good idea who’s going to be paying for this mess.
Just look at the way the 700 billion dollar bail out plan has turned into a money grabbing whorefest. It isn’t going to be used as intended, the bankers have Paulson in their hip pockets, it just another steal from the middle class and give it to the rich scam.
Even with job security written in to the deal GM will find away to get around it and screw the worker guy in the end.
October 27th, 2008 at 8:17 am
It’s one thing for the automakers to ask for a loan to continue operations with the expectation of paying the loan back. It’s a different story when one automaker asks for some cash to buyout another automaker and kill 50k+ jobs in the process. I don’t see this as being a good option for GM.
October 27th, 2008 at 11:36 am
http://www.1853chairman.com/2008/10/27/chrysler-dealers-under-gm-states-would-rule/
Rich, Mopar Dealer,
You may have seen this article in Automotive News, but it was picked up by this UAW guy and makes interesting reading,especially for dealers. (By the way, that’s the UAW local at GM’s Springhille, TN AP, that was built to launch Saturn as the first new GM brand since Custer commanded a cavalry troop)..
Say, while enjoying the fruit of the vine over the weekend, I dreamed up this rosy scenario in an attempt to make chicken salad out of chicken sh@#: Since its Chrysler that has the $11 billion cash horde that is the prime motivating factor behind the Cerberus push to merge, it only stands to reasond that Chrysler come out on top in the deal and that GM plays second fiddle. Another key element is to get the size of the American automotive industry down to a size that comports with the reality of the marketplace, and that means closing some plants, eliminating some brands and reducing the number of dealers well below the combined 10,000 existing level.
COMBINE THOSE COMPONENTS and you come up with this dreamy solution: First, call the new corporate entity Chrysler Motors Corporation. (That sounds better than General Chrysler or anything else). The Hq. will of course remain in Auburn HIlls. That prime piece of real estate that houses GM Hq. in downtown Detroit can be put up for sale or leased out, though the additional space may be needed for a few years. Secondly, eliminate weak brands and those with the oldest plants as rapidly as possible. That means eliminate GMC trucks, Pontiac, Buick and Hummer (which is on sale now). Keep Chevy, Cadillac and Saturn from the GM stable. This closes lots of dealerships and plants, more than if you shut down the Chrysler brand or the Dodge brand. NEXT, to even things out, you gotta shut down Sterling Heights and eliminate Sebring/Avenger. (Newark and Dakota, Aspen and Durango are already scheduled to bite the dust). Next, bring back Bob Lutz and make him Vice CEO Emeritus of Product Development or some other fancy title and have him rationalize the Chrysler 300 with the top-of-the-line Buick, make a modified Malibu for C-D-J dealers to sell as a new Avenger replacement (but no badge engineering), and as someone else suggested, get rid of the @#$ing World Engine from Dundee and use GM’s wonderful new 4 cylinder ecotech, or whatever in the hell they call it. Sure, there will still be irrationalities like the obvious need to retain both Chevy trucks and Dodge trucks with no commonalities because of the nature of truck buyers, but that just recognizes the limitations of the human condition and shouldn’t give rise to making the perfect the enemy of the good.
If anyone thinks this won’t work, even with Lutz there to straighten out the combining fo the product lines, I’ll be available to act as a consultant for a few years..
Please don’t tell me that I had too much to drink.
October 27th, 2008 at 2:25 pm
http://www.autonews.com/apps/pbcs.dll/article?AID=/20081027/ANA02/310279919/1128
“GM and Chrysler mull job-sparing deal for U.S. aid”
Automotive News
Mon. Oct. 27
Here’s the latest and most reliable news on the talk of combining GM and
Chrysler.
October 27th, 2008 at 5:58 pm
DaveS
If you have to ask then Yea you had too much to drink! LOL
October 27th, 2008 at 10:48 pm
Boys, now you are talking! The merger between Chrysler and GM is the best ideal I have heard so far. But, it should be Chrysler-GM, not GM-Chrysler and definitely not General Chrysler or some other stupid name. Chrysler definitely needs to be in the driver’s seat on this one and not get suckered as it did with the Daimler deal.
I say they need to keep the two companies as separate motor divisions. In other words, a true merger, not an acquisition and definitely not a consolidation. Let’s keep it a simple merger of equals with separate checkbooks. Separate store fronts, but a shared back room. Are you with me?
Now, let’s talk leadership. Hell man, let’s bring back Bob Lutz as CEO and get rid of the boobs with no industry experience. Lutz is a real car guy, and he has a damn good record. He could give us the Chrysler we thought we were getting with Eaton. Let’s give Lutz the key leadership position, not one of emeritus. That title goes to Iacocca - even though his politics are messed up lately. Lee needs to channel his anger - as he used to say, “Don’t get mad, get even”. In other words show up the Germans, Eaton, and all the rest.
For the line up, they need to keep Chrysler, Dodge, and Jeep from the Chrysler Company and add Plymouth and Imperial (as a Chrysler product - not a separate division). From GM, they need to keep Chevrolet and maybe Cadillac.
As for strategy, they need to close a lot of the older plants and move then to the south where the labor union is not as strong to get costs under control. In other words, use the Toyota, Honda, Nissan business model.
Then, they need to hire younger, energetic, enthusiastic workers who have an “America first” attitude and good basic skills with mechanical abilities.
Combine all the above with the high tech systems and procedures in the industry supply chain and the New Chrysler-GM will be the best company in the industry by far.
Go, Chrysler-GM, Go Get ‘Em!
October 28th, 2008 at 12:08 am
Trust me.Once gm gets a hold of chrysler the fat lady will be singing.Chrysler plants will be closing, vehicles will be eliminated and tons of jobs will be gone.
GM nor Chrysler have been making for some time now and i dont see how a merger will make any difference.It is almost 2009 and people are losing their jobs left and right and there isnt any job creation. Even if there is job creation, it will be low paying jobs.
These are different times my friends.The days of the big 3 making billions of dollars a year are long gone.Its just a matter of time before the government stops giving out bailout loans to the automakers.
This will be the last chance for any hope for the big 3.
October 28th, 2008 at 12:10 am
I 100% agree with Tim!
October 28th, 2008 at 8:31 am
If this deal goes through it is the end of Chrysler. GM will be next. Time to email, fax, call, and write your congressmen.
Just write: “no to taxpayer funded Chrysler takeover! Save American jobs. Stop the bailouts for CEo’s or we’ll bail you out of office!”
An outcry from the public stopped the Dubai ports deal two years ago and stopped the immigration bill last year. Let’s see if the people’s voice still matters.
October 28th, 2008 at 10:57 am
Frank, are you Oscar?
October 28th, 2008 at 12:03 pm
Anonymous - Oscar posts under a number of names.
October 28th, 2008 at 7:20 pm
Who is Oscar?
Does anyone want to see Chrysler take it on the chin this time? I don’t think so!!! It has more cash than GM, and we definitely don’t want it to get screwed over by GM as it did with the Germans. Right?
As an industry analyst, I purport that GM needs to scrap Pontiac, Buick, Hummer, Saturn, and GMC trucks, leaving it only with two brands - one for the working class and the other for the rich. It doesn’t need Buick because Chrysler would better fill that segment. The same is true for GMC trucks. We don’t need it because we have the Dodge Ram. Then there is Pontiac. Why continue with it when you have the Dodge? The Imperial should be positioned as the ultimate Chrysler, built in the Dodge Viper factory. Some will argue duplication with the Cadillac brand, but the Imperial could be hand-crafted and positioned against the Masaritti, a completely different market than the higher volume Cadillac. As for adding the Plymouth – we recommend that it capture the fleet sales market, maintaining economies of scale for the entire corporation.
October 29th, 2008 at 8:22 am
Frank I like the fact you are arguing for Chrysler’s brands to remain alive. I don’t think the Chrysler brand itself will survive. I’m doubtful whether Dodge will either. I think the best we could hope for would be that the Ram lineup would stay in production, maybe the minivans, and we’d see all the other lines slowly fade away. They’d keep the Wrangler certainly, but little else of Jeep. GM might keep the Challenger in production for a while, until they close the factory. I wonder how far along the 2010 Charger and 300 are. They’d probably pull the plug if this deal happens next month.
Maybe it’s better Chrysler fades away now–at least it’s at a high note: we’ve seen the 300-C come back. In the 80’s and 90’s I scarcely would have thought Chrysler would again build a rear-drive Hemi-powered beautiful brute. Maybe it’s better the brand fade away now, rather than end up as a rebadge for Chery or Brilliance auto or Chevrolet. It was awesome to see such Chrysler 300’s again, and hear the hemi bellow under a Chrysler grille, even if for but a short time. It was nice to dream that maybe there could be an Imperial again–not that 2006 monstrousity, but something that would compete with the best in the world like Chrysler used to. Unfortunately the Imperials, and soon the hi po 300’s will be something we merely read about in books, or if we’re lucky enough, see occasionally at a car show. If you own one, hold onto it, share with your kids and grandkids a piece of that legacy. It will soon be gone, replaced by the plain vanilla of Lexus and the subconscious conformity of BMW.
October 29th, 2008 at 8:35 am
Yes, go out on a high note. Build the last 300 2009 Chrysler 300-C’s as Heritage models with 375 horsepower 5.7 mills. And the last handfull of 300-C SRT-8’s with 392 hemis, 500 plus hp. No one will say Chrysler didn’t go down swinging.
October 29th, 2008 at 5:53 pm
Frank - If you were truly an industry analyst you would not have made the statement about the Imperial. Actual analysts have already established that there is no market for it. The rest of what you state is a pipe dream, the new Silverado is not going to be ditched, GM spent a lot of money on that platform and it has won accolades. The other points you make are very arguable, I don’t know that any Chrysler brand is better than its GM equivilent with the exception of Jeep.
October 29th, 2008 at 8:29 pm
Hey Reflex, Frank is just nutty ole Oscar, don’t ya know? Oscar and his Imperial saving the day for all in GM/Chrysler world.
October 30th, 2008 at 3:10 am
One very important point that hardly gets mention about the DAMNEAR Chrysler merger was the fact that. Chrysler had 37 billion dollars not value also paid 35 billion into the pention plan. This ready cash excited eaton call his german friends he made while over there. D.B. came to the merger table with only asset value and a 90 plus dollar stock value, Chrysler stock was recovering from the split which at that time lessened our value. The first thing to go was the money straight to the D.B. bank accounts. Chrysler was able have another profittable year beside that robbery. Execs started taking million dollar ecsape deals from Chrysler. they knew.
The last two year before the sale chrysler had 18 months of record sales, but to keep rom paying out profit sharing checks Chrysler was charged 500 million dollars a quarter by DAMNEAR for the right of doing the globe market they so disired.
SO DON”T TELL ME ABOUT BEING RAPED AND F*&@ed I Know all to well.
How I know why EATSHITton was crying at the merger party.
October 30th, 2008 at 3:15 am
One more thing the money at that time Chrysler hope would support the company for ten years even if they only sold less that 26% of the previous year. And if chrysler was so bad how did they earn 11 billion under the Cerberus leadership?