According to the Wall Street Journal, GM and Chrysler are in SERIOUS talks regarding a merger. WOW. Talk about a drastic turn of events if true this will undoubtedly "rock" the auto world. For better or worst I don't know but this is shocking news. And where would Ford stand if this is true?

 

Ford will cease to exist by december of this year. or 4th quarter results next year at the latest.

There, you heard it here first.

Fords stock is essentially a penny stock. ( passed on an option for 100,000 shares this week cuz I didnt feel a need to evaporate a quarter mil of my retirement) The only money coming in is from residual over the shedding of jag and volvo and from the mazda stake.

GM has about a year of cash left and why the frig would they want chrysler? that company has no product anyone wants (as evidenced by sales)

 

I dont see why GM would want Chrysler. Chrysler really has nothing that GM would want and Chrysler is in even more trouble than GM is.
GM has enough problems, they would be pretty stupid to buy Chrysler, IMO...

 

There have been rumblings like this for quite some time now.

I personally think that GM might be the target of a hostile takeover attempt...perhaps by another automotive manufacturer. One that begins with a "T"...think about the possibilities that would present.

 

well gm already owns 20% of toyota so a stock swap is possible.

not to diverge, but Fords crummy cash position is a lot due to these new fangled trucks.

Check this out:

1996, the big 2 has trucks long in tooth so they decide to fix what was not broken and redesign new ones (and at the time they were not losing market share)

GM has an auto stigma that no matter how many times they win JD powers, people wont buy the cars and were not so much leaving the trucks but rather new entrants were looking toyota and nissan.

GM reaches into the parts bin and takes the small block redesign, adds a little iron and has a zero-warranty claim winner.

So what does ford do? takes the most reliable motor they ever built, where the tooling was paid for 30 years hence and drops it.

Then they take the LEAST reliable motor they have been working on (the 4.6 xOHC) and decide to truckify it. (I did not say least reliable ever built, I still think the pinto engine holds that one)

So rather than make an SFI update to what works (and the 300 with its gear drive housing made it adaptable to an OHC version in hours) they threw away an option that was essentially the cost of molten iron.

the replacement - the 4.2 V6 - well - just sucks, always has, always will.

Now mind you, go back to a previous point, market share was not dropping...it was increasing still. The trucks return 40% of the purchase cost to the company as pure cash. This enabled both companies to build a war chest - or so they thought.

The 4.6/5.4/V10's cost over 4 times as much to make (not only was the tooling on the old engines paid for, it was adaptable to new designs) so the tooling cost went up, as well as the manufacturing cost - far more hours and processes. Right off the bat this nailed the cash position of ford, they are gonna have to increase sales well over 30% in 5 years (which expired in 2002) to make it. they didnt.

Then to add insult to injury, ford engines, for decades almost as trustworthy as GMs SB and BB V8's, started failing - often right out the door. Nearly half of the first 2 years of the 5.4 were replaced en masse under warranty - not fixed in the shop, REPLACED! Warranty costs eat cash. Then the transmissions, the AOD was the only 4 speed they ever got with a bit of longevity in it. the E40D tortured its owners for 4 years before its failings were addressed, and the AODE/4R70W added a new wrinkle. Ford increased its powertrain warranty claims tenfold in the first 50K miles of ownership.

Was that all they did? we wish.

GM and DC simply hung new sheetmetal on essentially the old truck with some minor eningeering updates in the chassis. The main reason being the powertrain and running gear were not 'in the way' - the magnum engines were just hopped up 70's engines and the new GM engines were ordered to be designed to not exceed the size and complexity of the ones they replaced.

by adding the xOHC heads to V8s, ford created tiny displacement engines that were physically larger than the 7.3 diesel. so now the new body and frame had to be designed around the powerplant. *all* without exception, new ford trucks are stuffed under the hood. GM? you can still climb in there beside the motor. But it still fits you say...true....but the labor costs to do the warranty work increased. Ford HAD to grant the dealerships more labor hours to do what were previously simple tasks. But this also meant that the design cost for the new ford pickup (x2) was nearly twice that of chevy. Then factor in that the first cut for 96/97 actually had its crash numbers drop DRASTICALLY such that it was rated a borderline unsafe vehicle. Along comes 60 minutes, wrecking a few trucks and pointing out the NHTSA data and off to the drawing board ford goes again - 5 years before the previous body style was to have been paid for! ouch.

Does it stop there? I wish.

GM designed its last couple diesels - all the way back to the 'olds diesel' Then GM bought 40% of Isuzu truck division, designed a motor, and had them build a nice new diesel here in the US.
DC entered into a long term alliance with cummins, but do not own the motor - hence a good chunk of the powertrain profit goes elsewhere.

Ford double whammied themselves: not only did they enter into an alliance with a more expensive maker (which is odd, the cummins looks like it was MADE to fit in the old trucks - more later) they got to keep less of the more expensive profit!

Now the more later part: most dont know this, but ford has made a 5.9L 6cyl turbo D for DECADES. In the same hp/T ratings as the cummins (when both were used in medium duty commercial trucks)

nearly the same size, weight and dimensions AND, the ford truck was well suited for large 6 cylinder installations with the properly recessed firewall. IF they would have stayed in house they would have had a BETTER profit picture than GM that went from in house to partially in house.

So, you will all soon witness the vanishing of the largest single name line in US history, because they were their worst enemy.

 

Through the miracle of bankruptcy, "names" don't need to vanish.

GM might be wise to buy Chrysler, keep Jeep, then loot and scrap the rest so it can't come back to compete.

 

According to the WSJ article, GM wants to unload the rest of (mortgage-laden) GMAC to Cerberus. Cerberus is comfortable with the finance deal, but as asked before, how would GM reconcile a merger with Chrysler? Keep the minivans and jeeps and dump the rest?

Talks are off for now due to market turmoil. Smartest thing they've done imo.

 

From everything I have seen (and I don't particularly like Chrysler), the vehicles that GM should be interested in are:

Chrysler minivans (were the choice for a long time, and with fuel economy)
The new Challenger and possibly the Cuda name (I still think the new Camaro looks more like an old Cuda, then an old Camaro)
Jeep
Viper and the Prowler
and any Diesel tech that was shared between them and Mercede's

But IMHO, a company in financial trouble, shouldn't be buying out a company that is about to go under.

 

$20 bucks sez you're wrong.

 

Ok, but I still if win if someone buys them out or re-orgs them and as such keeps the 'name' for PR sake.

 

Brrrreaaaakkk...


Wrong answer.

 

No, right answer, Just as Pan Am flew in 2000, it was not the airline, just a name someone owned the rights to. My position and $20 says that by end of year, or the posting of 4Q08 results, Ford is gone and whether or not someone buys the rights, takes over in bankruptcy or whatever makes no diff. They are gone.

 

^^^ In this corner of the world, this is known as "crawfish'in"

 

"Ok, but I still if win if someone buys them out or re-orgs them and as such keeps the 'name' for PR"

What people forget is that all a company has is a "name" and a current lineup of vehicles. If the "company" re-orgs, has mass executions, whatever, it still has the name/lineup/assets less whatever is stripped out. That's why I'm fine with companies that don't produce anything really special getting bumped off if they fail.

If the countries that are competing with us successfully can do it using young brands, we can do it to.

So what if the Big Three collapse?

I'm not invested in any of them, and no matter who makes trucks a mechanic can always own and maintain them. Once a truck is out of production for a few years, the aftermarket takes over anyway.

 

I agree. People have been saying for years that Ford is about to go bankrupt and it hasnt happened yet.
If Chrysler hasnt gone bankrupt yet, its not going to happen to Ford.