Chrysler and General Motors in merger talks

Will the ‘Big Three’ become the ‘Dynamic Duo’?
By Gordon Sova
||Last Updated: 12/31/2008

The names of so many of the car companies of the early 20th century are now either names of divisions of existing assemblers (Dodge, Buick, Lincoln), or relics of the past (Rambler, Studebaker, Hupmobile). Are we witnessing the sun going down on Chrysler?

The merger talks between the car makers was met with caution by the financial press, who pointed out that the acquisition of Chrysler by GM (which is what the deal would end up being) would have several serious challenges. These challenges would include huge redundancies, massive severance payments to reduce those redundancies and a weak auto market at the end of it.

What these same analysts generally feel makes the acquisition interesting to GM is the leverage it will give the company over banks and unions. There is speculation that the Big Three will have to go back to the unions mid-term anyway to ask for wage concessions beyond what they have recently achieved. A merger would give GM more clout in this confrontation.