Chrysler corporation selling to GM?

[stripedelete]

           
A major multi-brand auto corporation is saying it cannot afford to develop new drivetrains for its bread & butter vehicle lines.  This is a roundabout way of saying they cannot stay in business. 

Bingo!

[Ghoste]

It could also be a roundabout way of saying we intend to stay in business so we are looking for as many ways to be profitable as we can.

[LaOtto70Charger]

I agree it can easily be how to cut costs the most and stay competitive.   Especially when you have wall street hounding you for less capital on the books with as much revenue as possible and constant growth even in developed markets.  Add in customers wanting next great thing used to computers and ipads constantly issuing new software changes yearly and codevelopment can make sense. Especially if competing against large vertically integrated companies.

[Mike DC]

  
I agree engines are less crucial to a brand than they used to be.  

But still, we're talking about something that is pretty crucial to the company's bottom line.  It's not supposed to be something they can't afford to develop.  



Imagine if Mopar was publicly saying it was cost-prohibitive to develop a fresh 5-6 liter V8 for the Ram trucks.  

[1974dodgecharger]

It will be that way for many industries.....in the future their will be 2 companies that stand as a whole U can't have one unless we let a monopoly happen then again having one and then subsidies might be 2.

   
If they merged GM & Mopar, it would produce one single mega-company with a dozen brands . . .

  . . . and a few years later after the dust settles . . .  they would decide they have about 4-5 brands too many.


Mopar hasn't been able to survive for very long on its own for decades.  There's a reason for that.  The whole industry has too many brands, period.  Everyone's math would look better if they had fewer competitors.  EVERYONE would be a little more profitable, there would be fewer redundant boring commuter cars, and the remaining brands would have more room for the fun stuff that Mopar is known for. 

[Ghoste]

That's how it works in Japan, a few mega-corps own it all.

[RallyeMike]

The other day, somebody told me that the corporation was pretty much giving up on the Mopar Performance line. They pulled out of Nascar. The truck line is separated. Frankly, what remains of Chrysler has given up on us. The two new Mopar's I bought in my lifetime were both lemons. Toyota and Honda each are soon (or already have) to employ more US workers than Chrysler. If they are gobbled up by GM could it be any worse? 

[Fitz73Chrgr]

Chrysler has been circling the drain for a long time.  New Fords are the way to go. 

[Paul G]

And it continues.

http://finance.yahoo.com/news/gm-asking-advisors-help-rekindles-fca-merger-talk-122607368--finance.html

[stripedelete]

Its hard to miss the irony.  Had he only said, "no thanks Mr Obama", there would be no need to leverage economies of scale and it could be argued GM and Ford would be stronger. 

[Mike DC]

Its hard to miss the irony.  Had he only said, "no thanks Mr Obama", there would be no need to leverage economies of scale and it could be argued GM and Ford would be stronger.

Probably true.  


But the people in charge of dying companies don't normally go around declining free govt bailouts.  We would have absolutely crucified him for that.  


And if Obama had offered GM & Ford a bailout but forced Mopar alone to go under, we would have absolutely crucified Obama for that.

And if Obama had refused to spend a very small fraction of the total bailout money to save anyone in Detroit, we would have crucified him for that too.  

And if Obama had refused to bail out any industries back then, period . . . . well, I won't even tackle that one.

[stripedelete]

Its hard to miss the irony.  Had he only said, "no thanks Mr Obama", there would be no need to leverage economies of scale and it could be argued GM and Ford would be stronger.

Probably true.  


But the people in charge of dying companies don't normally go around declining free govt bailouts.  We would have absolutely crucified him for that.  


And if Obama had offered GM & Ford a bailout but forced Mopar alone to go under, we would have absolutely crucified Obama for that.

And if Obama had refused to spend a very small fraction of the total bailout money to save anyone in Detroit, we would have crucified him for that too.  

And if Obama had refused to bail out any industries back then, period . . . . well, I won't even tackle that one.

We knew it was a union bail-out / payback at the time.   Remember, the elections was only a few months before.
But, had he only just said no, " Chrysler will not provide us any more than $6 billion in cash" he wouldn't have to br throwing proposals over the security fence at GM right now.

The extent of his efforts makes me wonder if Chrsyler is ending anothe cycle. ie 1979, 1988, 1997, 2007.

[Mike DC]

I basically agree.

[Ghoste]

A union bailout?  So all white collar workers (esp execs) were excluded somehow from benefiting?  (which makes sense after all because they were innocent of any mistakes getting them where they were)

[wingcar]

Could the Hellcat be the last great grasp of breath before the death of Chrysler?   

[stripedelete]

A union bailout?  So all white collar workers (esp execs) were excluded somehow from benefiting?  (which makes sense after all because they were innocent of any mistakes getting them where they were)

Sure, white collar  benifited, however, if there were no union, Chrysler was done.   They were not international,  the southern states, democratic and republican, and the rest of the republicans, were against any bailouts, and since the 79 bailout they had run out of gas every ten years.

The unions were huge in his first and second elections.  He owed them and he needed them for the next round.

disclaimer:   this is not a personal inditement of the president, unions, or anything else.  Just history - the way it played out.

[Mike DC]

 
The same argument can be made that GM (and maybe Ford) should have gone under in 2008 too. 

They aren't going broke again every 10 years . . . yet.  Legend has it that GM was a few minutes away from bankruptcy in the past at least once already.

[Ghoste]

Don't misunderstand me either because I am no fan of unions.  And I think I misunderstood what you were saying as well.  You weren't talking about specific households where each dollar went, if I understand you now you are referring to where political favors were owed.  (or maybe I still dont get it)

[ACUDANUT]

Don't misunderstand me either because I am no fan of unions.  And I think I misunderstood what you were saying as well.  You weren't talking about specific households where each dollar went, if I understand you now you are referring to where political favors were owed.  (or maybe I still dont get it)

Back in the 30's unions were good. Now they control everything.  Bad idea. If you don't like it there quit. They only drive the prices up.

[Pete in NH]

At the end of the Lee Iacocca era in the early 90's Chrysler was in excellent financial shape with a ton of money in the bank. That was one of the reasons Daimler launched their hostile take over. The Germans looted the company  in every way they could. What was left was sold at a fire sale price to a group of investment bankers whose intent was probably to break up what was left and sell the pieces.  When the 2008 crisis hit there was no one to buy the pieces. Jeep was probably the only thing worth any real money. First the Germans now the Italians, seems like the old WW II axis powers are getting their revenge on Chrysler for all the WW II tanks and guns Chrysler built.

It was the Germans looting the company that set it on the road to ruin. Why the federal government ever allowed foreign control of such a large number of American jobs and manufacturing capability should have never happened.  

[Ghoste]

I'm not sure if the German were a hostile takeover or not but in either case its worth noting that prior to Daimler, the executive board at Chrysler were trying to fend off a hostile takeover by Kirkorian and...            Lee Iaccoca.

[stripedelete]

 
The same argument can be made that GM (and maybe Ford) should have gone under in 2008 too. 

They aren't going broke again every 10 years . . . yet.  Legend has it that GM was a few minutes away from bankruptcy in the past at least once already.

Agreed.  Uncle same short circuited capitalism.   "Private Profit - Public Loss".   But, this last time the music stopped, Chrysler was the guy with out a Chair.

[stripedelete]

At the end of the Lee Iacocca era in the early 90's Chrysler was in excellent financial shape with a ton of money   

Better take another look at that.   Chrysler was more broke in 1989 than 1979.  They "skinied" through to cab forward and the pick-up and were rescued by low interest rates and relaxed financing.  The 1990s was the start of "if you can fog a mirror, you can buy a car or a house". 

In addition, in the early 90's, the first generation of buyers that didn't remember Detroit's steaming turds of the 70's and 80's entered the market.  This demographic helped all the U.S. Automobile manufactures. 

[Mike DC]

The minivan-->truck/SUV boom helped as much as anything.  First the minivans replaced station wagons in the 80s, and then SUVs & trucks replaced minivans.  Between Dodge & Plymouth & Jeep & Ram they benefited through that whole stretch. 

The trucks/SUVs also have much larger profit margins than cars.  If all of Detroit didn't have the truck lines they would have all been broke by the 1990s.  They haven't been able to make very profitable car lines in decades. 

[ACUDANUT]

At the end of the Lee Iacocca era in the early 90's Chrysler was in excellent financial shape with a ton of money   

Better take another look at that.   Chrysler was more broke in 1989 than 1979.  They "skinied" through to cab forward and the pick-up and were rescued by low interest rates and relaxed financing.  The 1990s was the start of "if you can fog a mirror, you can buy a car or a house". 

In addition, in the early 90's, the first generation of buyers that didn't remember Detroit's steaming turds of the 70's and 80's entered the market.  This demographic helped all the U.S. Automobile manufactures. 

I hope you mean the late 70's..