Steve Funk

GM-Chrysler Merger: A Disastrous Deal?

"31 October" is right. GM has some exciting technology. But they were first to market with an electric vehicle (I believe '94 MY) and look where that has got them. GM has had many good cars for years now, but they are "Levi's" and everyone wants "Lucky" jeans. I don't know how you turn that around in an industry that takes 3-4 years for a product change and billions in tooling. I like GM, but I don't see their way out of this one.

There is one last ditch possibility. Perhaps this is not a bone headed business move (GM has long disdained Chrysler), but a desparate political move. If GM really is on the ropes, they might as well make a "too big to fail" organisation. Combining with Chrysler pretty much makes Congress choose whether or not they want US car companies. In the current wave of nationalisation they will very likely come under the protection of the Federal government. If you think product cycles are slow now, just wait until that happens. With so much uncertainty I am not sure why anyone would still be in auto stocks.

Just a side note. No one ever talks about the special controlling class of stock that the Ford family owns. There are now hundreds of trust fund Ford families living off this stock dividend. A vote to merge would certainly be a vote to cut off all funds to the Ford family who have not worked for generations (except Bill). They will choose to go down with the Titanic hoping there will be a lifeboat in it for them. I wish them luck.