| Business | October 17, 2008 2:24 PM EST |
| GM and Chrysler talk merger |
| By Luisana Suegart from Markets.com |
Chrysler LLC and General Motors Corp. are in preliminary talks about a possible merger as car sales continue to decline in the ailing U.S. market.
The merger would be aimed at reducing cost and overhead, according to John Casesa, a partner at Casesa Shapiro Group consulting firm, although the discussions are in the very early stages. Bloomberg quoted Chrysler spokeswoman Lori McTavish saying that the carmaker “as a matter of policy does not confirm of disclose the nature of its private business meetings.”
If the merger comes about, GM would acquire Chrysler, which is 80-percent owned by Cerberus Capital Management LP since August 2007 when Cerberus acquired Chrysler from Daimler AG. The Wall Street Journal reports that talks of the merger have been put on hold due to the financial crisis taking over world markets and the car industry.
GM’s sales have fallen 18 percent through September, while Chrysler’s have fallen 25 percent; both are suffering the consequences of higher fuel prices and the credit freeze. GM stock lost 80 percent of its value on the NYSE.
On Thursday, J.D. Power predicted even bigger drops in auto sales in the US and around the world to 2 million less than the amount sold in 2007, a 15-percent difference.
Once GM acquires Chrysler, it will take first place in global sales, with Toyota Motor Corp, as its biggest competitor.
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