Chrysler and GM Merger Could Happen This Month

Speculation continues to grow amid the possibility of a merger between Chrysler and General Motors. Sources say a merger could happen by the end of the month, while many others still have doubts.

Chrysler had reportedly been in talks with other automakers as well regarding the possibility of a merger in addition to GM. Talks had been done before but had stalled. However, with the economy in tatters, the time is ripe for mergers.

Talk of mergers for Chrysler had begun less than a year ago when private-equity firm Cerberus had acquired Chrysler from Daimler Benz. However, with the credit crunch and changing buyer demand, things have not gone well for Chrysler, or for Cerberus.

Auto sales overall are expected to be about 16 percent lower than this year compared with last year. In addition, JD Power analysts expect auto sales to decline another 11 percent next year, which is enough to worry the already struggling domestic automakers, and their dealers.

Analysts can agree that Chrysler is in the worst position when compared with Detroit’s other two automakers. However, Chrysler dealers Lubbock and others believe it’s unlikely that Chrysler will go out of business completely any time soon as the automaker will likely be mergers or absorbed into another company.

In the instance of a merger, Chrysler and GM would have plenty of redundant brands and models that the automakers would have to contend with. As a result, some suggest a potential merger between the two simply wouldn’t make much sense. Already GM, as well as Ford, is shifting engineering operations to accommodate the growing demand for smaller, more fuel efficient vehicles worldwide, such as the latest Aveo at Detroit Chevrolet Dealers. With great expense being invested in those manufacturing and engineering endeavors, managing the addition of Chrysler may prove to be too difficult for GM.

In addition to Chrysler’s discussions with GM, the automaker has also dealt with Nissan. Earlier this year, Chrysler entered an agreement with Nissan to produce the next generation of full-size Nissan trucks, while Nissan will be producing a compact vehicle for Chrysler. Although the relationship should benefit both companies, a merger between the two would be highly unlikely.

Word on the result of a merger between Chrysler and GM could come by the end of the month, and with auto sales and the economy looking dismal, the auto industry is eager to hear the outcome.

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