Rumor: GM and Chrysler in merger talks & other shakeups

thedguy

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If Ford sell their Mazda stake all is not lost for platform development, the German Ford company develop fine chassis - Focus for example.

And this:

Ford Focus RS already a winner. ...

http://www.mirror.co.uk/advice/moto...rd-focus-rs-already-a-winner-115875-20744057/

They source a LOT of their 4 cylinder and v6 engine development from Mazda. any wonder why the current line of 4 cylinder duratec's/Mazda MZR line of engines are SOOOO responsive to mods?

The best part is that the first people Toyota approached about licensing the Prius' hybrid drive system was GM... who turned them down.

Nissan didn't. That's why we now have hybrid Altimas and no hybrid Impalas.

Stupidity all the way around at GM.

Perhaps they didn't like the terms of the license? Especially considering they are working on their own design that I think will end up being far superior, that being the series hybrid design of the volt.
 

Spectre

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This was at the time of the first Prius, circa 2000. It was basically a gift from Toyota to GM because of their working relationship, and GM said no - they had tried it with the EV1 and didn't think anyone would buy a hybrid.
 

Wizegui

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In their defense, they do have have their two mode hybrids, though they're seriously limited in capability coupled to ye old 4 speed slushbox for some of their cars, making the difference in fuel economy less significant.
 

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This was at the time of the first Prius, circa 2000. It was basically a gift from Toyota to GM because of their working relationship, and GM said no - they had tried it with the EV1 and didn't think anyone would buy a hybrid.

The rise in fuel costs due to rampant speculation and some interesting liberties taken by the oil companies was entirely unpredictable. At the time gas was cheap and the benefits of hybrids were slim to one, in fact the original Insights and Priuses were selling very slowly. It wasn't for another 5 years that they started taking off.
 

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Oh dear, the last thing either GM or Chrysler need is more dead weight, under-utilized factories and redundancies. They should be kept far, far away from each other.
 

Spectre

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The rise in fuel costs due to rampant speculation and some interesting liberties taken by the oil companies was entirely unpredictable. At the time gas was cheap and the benefits of hybrids were slim to one, in fact the original Insights and Priuses were selling very slowly. It wasn't for another 5 years that they started taking off.

Actually, the writing was on the wall for higher CAFE standards even back then. They should have invested in it even as a "loss-leader".

Here's the sick part - even when the buying public was demanding hybrids, GM refused to license the tech from Toyota. Ford *did*, and we got the hybrid Escape from that.

GM has yet to learn that if you don't build what the customers demand, you will have no customers.
 

thedguy

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The rise in fuel costs due to rampant speculation and some interesting liberties taken by the oil companies was entirely unpredictable. At the time gas was cheap and the benefits of hybrids were slim to one, in fact the original Insights and Priuses were selling very slowly. It wasn't for another 5 years that they started taking off.

except when fuel prices started to crest over $2 everyone started screaming for fuel efficiency cars, and GM ignored them after they climbed and dropped prices 2 and 3 times.
 

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Yeah nobody could expect rising fuel prices, they only climbed for about 50 years now.
Relative to the value of the dollar fuel prices dropped from the late 70s to the turn of the century.
 

Arctor

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Actually, the writing was on the wall for higher CAFE standards even back then. They should have invested in it even as a "loss-leader".

Here's the sick part - even when the buying public was demanding hybrids, GM refused to license the tech from Toyota. Ford *did*, and we got the hybrid Escape from that.

GM has yet to learn that if you don't build what the customers demand, you will have no customers.

I can't believe you're saying Ford knows anything about giving people what they want, at least GM has started building cars with better QC and better interiors. Not to mention their cars have been improving in gas mileage without having to resort to hybrid tech. Don't get me started on how much of a joke it is and I think GM execs realized that in it's current state hybrids were merely a gimmick, providing little to no tangible benefit for most people over a regular small car.

Ford on the other hand continues to make dull, wobbly cars for old people that are about as sharp as a butter knife and interesting as a VHS player. They hoard loads of good cars over in Europe but the one they did bring over (Focus) they softened and cheapened up to the point noone actually wanted one. Then they tried to use that as proof Americans didn't want small cars as tons of people still bought Civics and Corollas and Ford buried it's head in the sand.
 

Spectre

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I can't believe you're saying Ford knows anything about giving people what they want, at least GM has started building cars with better QC and better interiors. Not to mention their cars have been improving in gas mileage without having to resort to hybrid tech. Don't get me started on how much of a joke it is and I think GM execs realized that in it's current state hybrids were merely a gimmick, providing little to no tangible benefit for most people over a regular small car.

Ford did get a *little* bit of a clue. At least they were smart enough to grab the tech license and put it in something that their customers were interested in buying.

And that's really what it comes down to. GM needs to learn that despite how stupid they think it is, if customers want a hybrid 5-door hatchback painted green with pink polkadots and a rotating windup key in the back, they better make one. Otherwise, someone else WILL, and those customers are *gone*, never to return.

Hybrid tech may be a gimmick, but it's a gimmick people want. GM didn't figure this out until very very late.

Ford on the other hand continues to make dull, wobbly cars for old people that are about as sharp as a butter knife and interesting as a VHS player. They hoard loads of good cars over in Europe but the one they did bring over (Focus) they softened and cheapened up to the point noone actually wanted one. Then they tried to use that as proof Americans didn't want small cars as tons of people still bought Civics and Corollas and Ford buried it's head in the sand.

Actually, the Focus sold well. The car that was the excuse used by the NIH'ers at Ford was the Mondeo, aka the Contour/Mystique - they let the UAW build them, and then when the low quality drove people away, they said "Look! People won't buy Ford Europe cars in the US!"
 

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GM buying Chrysler would be like "...the Titanic rescuing the Lusitania"

GM buying Chrysler would be like "...the Titanic rescuing the Lusitania"

http://www.thetruthaboutcars.com/ed...-death-watch-205-the-world-according-to-tarp/

A Chrysler ? GM merger is a mind-boggling prospect on many levels. But the over-arching question is simple enough. Why? Why in the world would General Motors want to combine with Chrysler? Given their respective balance sheets and future prospects, the analogies pretty much suggest themselves. My favorite: the Titanic rescuing the Lusitania. But if you want to understand the logic behind this merger deal, such as it is, we?ve got to explore a different metaphor: ?changing horses mid-stream.? First, it?s important to realize who?s holding the reins at Chrysler. While Cerberus Capital is ChryCo?s listed owner, the private equity group used OPM (Other People?s Money) to bankroll their purchase. Reports at the time of sale indicated that Cerberus owner Steven Feinberg used his [then] bulletproof rep to sweet-talk his ?partners? into the deal without due diligence. Be that as it may, JP Morgan-Chase are now in the saddle, to the tune of $6b dollars.


Imagine the Chrysler horse trying to cross a river to get to an equine sale on the other side. The rider thought the river was just a trickle. But it turned into a raging torrent, dragging the horse sideways towards a killer waterfall. And there, right next to the Chrysler horse: a steed named GM. Yes, GM?s also being dragged towards the abyss. But GM?s a bigger beast with more friends ready, willing and, uh, ready to attempt a rescue. So the banks decide to switch horses.


OK, enough with the analogies. Let?s talk turkey. I mean, business.
JP Morgan-Chase reckon Chrysler?s going down, taking their six bil with them. So they?d rather have their money in GM, which will, no doubt, receive a federal bailout (the latest rumors have Uncle Sam purchasing an equity stake, I shit you not). For its part, Cerberus [still] has its eyes on GM?s 49 percent share of lender GMAC. Cerberus is also counting on a federal bailout to save that particular piece of bacon, via the Troubled Asset Relief Program (TARP). So the banks get out of Chrysler, Cerberus gets out of Chrysler AND gets GMAC (which it can then, finally, combine with Chrysler Financial).


Fine. So what the Hell does GM want with Chrysler? Cash. As we?ve reported here many times, General Motors is running on fumes. While the aforementioned bailout is a virtual cert, it all takes time. And time equals money. And GM doesn?t have the money to wait until President Obama gets his team together and cuts a deal to save the United Auto Workers American jobs. Their time horizon is the next six months, they?ve sold all their assets and nobody in their right mind will loan GM a plug nickel.
I know it?s a completely counter-intuitive idea: GM getting the cash in needs for its short-term survival by ?absorbing? Chrysler. But there it is. Supposedly, Chrysler has amassed a $11b cash hoard, accumulated through the laborious process of not spending it on future products. And then there?s JP Morgan-Chase, who could do what banks do when they have nothing else to do: throw good money after bad. In other words, they?re good for at least a couple more billion.


So GM merges with Chrysler and lives. Of course, the result is The Mother of All Clusterfucks: a gigantic American automaker with 11 weak brands, well over 100 products (many of which overlap), thousands upon thousands of unnecessary dealers, excess workers and plants and facilities, a completely unworkable bureaucratic structure stuffed with managers (who?ve already proven their abject inability to make money building and selling cars) and incompatible software (for all we know).
On the positive side, GM is headed by a man whose only appreciable professional talent is cutting costs and selling things? and God know there would be a lot of THAT to keep him occupied until the cavalry arrives. Obviously enough, the end result would be the same: a large car company that still doesn?t know how to make a profit. Even worse, if the rumors are right, it would be a large car company that doesn?t know how to make a profit partially owned by the U.S. taxpayer.


Many of our Best and Brightest have labeled this deal ?America Leyland,? referring to the disaster that was the combination, nationalization and eventual extinction of Britain?s car industry. Spot on. Should this deal down, that?s EXACTLY where this is heading. But it should be remembered that Leyland took more than a decade to take a dirt nap. GM?s management, as always, is thinking about next week. This is, of course, the reason for their demise.


So those of you who said ?see you at Death Watch 567? may well be right. While this prediction may now prove to be accurate, I can hardly imagine a worse scenario for American industry, the American auto industry and all the people who depend on it for their livelihoods.
 

un-dee

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That sums up what I am thinking about the whole deal pretty well. Mercedes couldn't save Chrysler when the economic situation was okay-ish (although already going down), why in gods name should GM be able to do it NOW...being a company that loses billions of dollars practically every minute
 

thedguy

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That sums up what I am thinking about the whole deal pretty well. Mercedes couldn't save Chrysler when the economic situation was okay-ish (although already going down), why in gods name should GM be able to do it NOW...being a company that loses billions of dollars practically every minute

Chrysler didn't need saving by Mercedes, it needed saving FROM Mercedes. The company was quite profitable before the "merger" happened.
 

un-dee

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:D Yeah you keep telling that, unfortunately I think its a load of bullshit from people who like to see the evil foreign takeover company as the one who ruins everything. When Mercedes bought Chrysler the US auto market was fine, all companies there were still earning profits. When they sold it, the market had changed a lot and it looked pretty grim for all US auto makers. I can blame Mercedes for doing that thing in the first place, because it was a stupid thing to do, but I don't believe for a second that Chrysler would be better off today without that deal, possibly they wouldn't even exist anymore.
 

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:D Yeah you keep telling that, unfortunately I think its a load of bullshit from people who like to see the evil foreign takeover company as the one who ruins everything. When Mercedes bought Chrysler the US auto market was fine, all companies there were still earning profits. When they sold it, the market had changed a lot and it looked pretty grim for all US auto makers. I can blame Mercedes for doing that thing in the first place, because it was a stupid thing to do, but I don't believe for a second that Chrysler would be better off today without that deal, possibly they wouldn't even exist anymore.

Chrysler was well off before Daimler came in axed Plymouth moved Chrysler down in luxury to fill the void, then replaced the Dodge Ram Van with a rebadged Mercedes-Benz van that even after improvements has not matched the payload of its predecessor from 10 years ago.
 

Spectre

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While I think the Sprinter was a good thing, there's something to be said for the lack of a real 3500-class van in the Dodge lineup. Axing Plymouth was about 30 years overdue; the brand should have been taken out and shot in the 70s after the musclecar era died because it had no real brand identity of its own after that.

The big thing that wasn't well known about the DCX "merger of equals" was that when Chrysler used Mercedes parts, they were forced to pay full dealer price to the parent division. They didn't get them at cost, which is what other makers do with divisional cross sales. The reverse was not true. Nor did Smart have to pay more than cost for their parts.

That right there should show you what Mercedes thought of Chrysler - a disposable asset, to be used to boost sales volume.

Mercedes also went through and flushed a lot of Chrysler's development assets and programs. Dumping the cab-forward concept, for example. One thing Mercedes tried but did not succeed at pushing through was swapping the famous Cummins turbodiesel in the Ram 2500/3500 for one of their own Mercedes diesels of considerably less power output. Apparently there was some mass revolts in the truck department when that was handed down from Germany. Heck, one of the only reasons people buy a Ram HD truck is because of the Cummins engine. Mercedes somehow thought that they could replace a 610lb/ft engine with a 300 lb/ft engine and the tristar logo on it would sell it. Fortunately, the mass dealer protest forced Mercedes to grudgingly shelve the idea.

Some of what came out of the merger was good - diesel Jeeps, the Crossfire, the LX/LY platform lifted from the older E-class. However, after the first few years, mostly what Mercedes did was ruthlessly exploit Chrysler and take it in some bizarre directions. For example, it apparently was German execs who ordered the Neon replaced with the pseudo-crossover Caliber after Chrysler had spent 15+ years building up the Neon brand's equity. It was also German execs that pushed through the Jeep Compass/Jeep Patriot, which are also on the Caliber platform, none of which have actually sold all that well.

They also introduced some pretty egregious character violations for Chrysler. Like, say, the Chrysler Aspen. Now, here's the thing - the Aspen was the name of a notorious failure of a car from Dodge in the 1970s. It is STILL infamous for being of poor quality and having multiple recalls; most examples of the breed are now safely dead. No American car exec would even dream of naming a car the Aspen. So, when German execs are looking for a name for their new Chrysler SUV, they look to Chrysler's past for a name, and look what they came up with! "Ja, ja, is city in Colorado, will sell truck well, give tough image and make Americans nostalgic."

Talk about total incomprehension there. They might as well have named it the Chrysler Yugo. Even in truck-mad Dallas, I've only seen a dozen of them since introduction that weren't sitting on dealer lots.
 
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Spectre

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^Add in the billions in rainy-day money that Daimler illegally funneled out of Chrysler and you've pretty much got the whole picture.

http://www.allpar.com/weblogs/2006/12/21/why-chrysler-is-perpetually-bankrupt/

Yup... and they did much the same thing to Freightliner, as the article alludes to. Mercedes' "ve are Mercedes, ve know best in all things, Mercedes ?ber alles" attitude has resulted in pretty much the destruction of Freightliner's hard won position in medium trucks.

Almost nobody buys Freightliner box trucks any more. They're all International/Navistar or one of the Asian cab-over designs now. You'd think Mercedes would have learned from the total abject failure of their original, Mercedes-branded medium truck division here, but noooooo.....

The only bright spot for the Freightliner brand is that some truckers still buy their semi tractor rigs.

Amusingly, it's gotten so bad that they've had to create a new brand, Sterling, to get people to buy their trucks.
 
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