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The real reason for the GM/Chrysler merger? Not because it makes business sense (it doesn't) but because it will make them "too big to fail." So they set themselves up for failure with the merger, then the taxpayer gets to pick up the tab, and they remain uncompetitive.


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tps wrote:

Another blog mentioned this as well and compared it to the fiasco in the 70's of British Leyland which combined what was left of the British auto industry and all but wrecked it.

Brock wrote:

If Chrysler/GM goes down and take the UAW with them it, it could be the best thing to happen to American manufacturing since Henry Ford. All those assets could be freed up for fire-sale purchase by new firms unsaddled with the UAW leg-irons or poisonously stupid Detroit business culture. Maybe Elon Musk could pick up a cheap brand or two, or some manufacturing capacity in Mexico.

A bailout isn't impossible, but we did let Enron, Worldcom, Lehman, Bear Stearns and Washington Mutual all go down the drain - so it's not inevitable either. Plus, after the banking sector bailout Congress' appetite for more bailouts must be pretty weak.

Bald Tires wrote:

Wasn't it just 4 1/2 years ago that GM killed off its Oldsmobile division in order to slim down and eliminate a "redundant" product line that overlapped with the Buick brand? From a marketing point of view, does it now make sense to reverse course and take on another automobile brand? It doesn't make sense to me. As you say, there has to be something else to it.

rickl wrote:

So they set themselves up for failure with the merger, then the taxpayer gets to pick up the tab, and they remain uncompetitive.

Sounds like a plan.

R Anderson wrote:

The plan is called Penn-Central, and will probably turn out about as well. Maybe Tesla and Aptera will split the carcass of "ConCar" after about 20 or 25 years of governmental malfeasance, but I'm not holding my breath.

Unfortunately, even if the Big Three die off, the UAW will live on; they organize grad students in a number of universities in MI and CA at least. And we wonder why a university degree is becoming so useless these days...

TBinSTL wrote:

Is this not sufficient justification for the Feds to block the merger? If there is a paper trail to verify this, I expect that the deal just died.

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About this Entry

This page contains a single entry by Rand Simberg published on October 20, 2008 10:44 AM.

Gaffe A Minute was the previous entry in this blog.

Inevitability is the next entry in this blog.

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