Madness doesn’t even begin to describe this…

I ignored this last week as I couldn’t believe it was even remotely possible, but it’s not going away.

There’s talk going around that GM, the very same General Motors that currently runs Saab, Chevrolet, Pontiac, Hummer, Corvette, Holden, Saturn, Daewoo, Opel, Buick, Cadillac, GMC and Vauxhall (let me know if I missed some) – this GM is apparently in serious talks with Daimler Chrysler about taking over Chrysler (incl Chrysler, Dodge, Jeep etc).

The big question is – why?

The negatives are so overwhelming it’s absolutely ridiculous. A bloated dealer network. More model clashes than you can poke a stick at, inventory problems galore and let’s not even start with the UAW issues.

I haven’t read into this fully yet, but there’s an article over at the Detroit News that’ll bring you up to speed. Obviously, if it were to happen, there would have to be some ramifications for Saab. But I think it’s way too early to figure that out yet.

All I can say right now is that if GM are considering this merely in order to fight off Toyota and retain some symbolism of being #1, then the inmates have truly taken over the asylum.

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19 Comments

  1. I couldn’t agree more. If GM goes through with this then they deserve to go bankrupt even if that would see Saab go down the tube too. Stupidity like this has yet to been seen on the tv… and that’s saying something…

  2. Swade I don’t see this happening. My guess is they are talking cooperation on platforms, or powertrains. Rick W. is a smart guy, I can’t believe he thinks this is a good idea. GM and Chrysler compete in every segment in the US market. GM would have to kill too many models which would cost too much money. Chrysler has a worse plant utilization percentage than GM does. I think sometimes the auto media drive a lot of this speculation. Maybe Dr. Z is just trying to drive up the price!

  3. Although I agree with Frank A that the talk is probably about cooperation rather than takeover, I don’t think the idea is as dumb as it sounds.

    What I see is GM working like a private capital firm, buying Chrysler(et al) and keeping the valuable portions and breaking up the rest and selling it off in pieces. Given the oversupply of domestic capacity in the US this could make sense. For instance, maybe GM keeps Jeep, sells the Dodge brand to the Chinese, a plant or two to Toyota, and sells the Chrysler name and some assets to Renault.

    However, since it would reduce competition (which would help GM of course) it probably wouldn’t get by antitrust review.

  4. If it’s true, this has to be about platform sharing or maybe buying a few key assets. If not, it’s a really bad and risky idea.

    GM doesn’t have the luxury of looking at this like a private equity firm. A PE firm can come in, fire a lot of people, make some enemies and then come out a couple years later saying they’ve done their job. GM would have too many problems with its own employees (i.e., UAW, salaried) if they chopped up another Detroit automaker like that and the negative PR would be devastating.

    As for combining the two companies as they are, I’m with the camp that says there’s just too much overlap between them.

  5. I agree with ajf — buying the company and chopping it up is the way to go.

    Jeep, the minivan franchise and the ‘Sprinter’ agreement are all worth cash. The rest is questionable.

  6. I hear Aston Martin are for sale πŸ˜‰ πŸ™‚ πŸ™‚ πŸ™‚ :).

    On a serious note, I don’t think it will happen. If it does, it will be more a development cost partnership scheme methinks.

  7. God, you’re so right, Swade. How are they going to mimic the agility and thrift of Toyota’s production with yet ANOTHER albatross around their neck (as if “legacy” costs of retirees weren’t enough)??

  8. I don’t see any reason why GM or Chrysler need to look at this. From a GM point you don’t need a competitor using the same platforms for anything. Why do US manufactutrers feel they need more SUV’s anyway?
    From Chrysler’s view, they can take platforms from both Mercedes and Mitubishi so why on earth would you want you use a GM platform?
    How about this for an idea.
    GM buys chrysler and in the process Daimler gets Saab and HUMMER.
    I can think a few initial problems with Saab changing hands, but on the whole and looking further than 5 years down the line. The idea of a Saab based on the next EVo sounds enlightening. A c-class based 9-3, the 9-5 based on an E-class, a Sonett using the next Gen SLK with AWD?…
    Maybe Mercedes would finally give the green light to many ‘on hold’ engineering projects that both companies would profit from.
    These are just quick thoughts and I haven’t really thought too hard about could it all be possible. it’s a bit pie in the sky but theoretically I think Mercedes could develope Saab to slot nicely under the parent company in terms of luxury, but would offer something different to those who want to own the merc, but can’t quite afford one. Saab would cover the area of those who are buying high-end VW and low-end BMW/audi. Hasten to add a position that Chrysler has tried to fill but not really achieved. A position that niether Mitsubishi or Smart could or ever need to fill.
    So you see, on face value A Daimler run Saab company could be a good thing….
    (maybe I should wake up now)

  9. You seem to forget that Saab and Opel is tied together whitin GM Europe. Nobody wants just one of the brands and all the costs to break up this technical relationship.

    In the case of GM and Chrysler, 1+1=1. It’s not good for the U.S. auto industry, since it would shrink it even more compared to the Japanese imports. Hence, it would never happen due to political reasons. I think companies like Renault, Hyundai and Honda are possible buyers.

  10. Assuming that this is not just wild speculation, and also assuming this goes deeper than just some previously rumored platform sharing, I only see two items within Chrysler that GM would desire.

    1) The Jeep brand to be incorporated into Hummer. Hummer started with the largest possible vehicle, the H1, then expanded their line downwards with respect to size. Jeep started with the smallest vehicle, predecessor to CJ5, then expanded their brand to larger vehicles. There still is minimum overlap of products and the two formerly separate brands could become one.

    2) Chrysler’s Mini-vans. GM has failed multiple times in trying to develop a successful mini-van and has recently decided to abandon the market niche due to these repeated failures. Chrysler is still the undisputed king of this segment. Buy the mini-van business, rebadge them, and don’t screw things up.

  11. I admittedly didn’t read the article linked in the post, but I have read about this on SAABCentral.

    From what I thought I understood DaimlerChrysler would only be interested in selling-off the Chrysler brand, not the whole group (Plymouth, Dodge, Jeep, whatever). Am I wrong?

  12. The good news is that what ever happens it should have zero impact on our favourite car maker. A good move for GM or Chrysler? Who really knows. As for why GM would do it, I think it was President Truman who said “better to have them on the inside of the tent p***ing out than on the outside of the tent p***ing in…”. Re Merc takong over SAAB, it could work but I still feel Renault Nissan would provide a better home / chassis / engines and they both have a strong turbo charging history – imagine an Aero X running on a bio fuel Skyline platform….

  13. DCX to launch $13 billion auction of Chrysler; Hyundai not interested

    U.S. investment bank JPMorgan is making final preparations before starting an auction of the Chrysler Group on behalf of DaimlerChrysler, according to a report by the U.K.’s Times.

    The state of Chrysler is obviously so bad that they need to do this in the open… Could be a bargain for GM, but still think it’s dead due to politics. Maybe some Chinese venture will pick up the pieces.

  14. Jon, Renault Nissan would be great! Wow, if only…

    I wonder if other auto companies who once considered Saab a decent opponent, now laugh at how they’ve gone downhill…

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