Both companies have registered massive sales drops and stock declines over the past month with GM's shares having fallen to 5$ compared to last year's 43$ while Chrysler's sales in September have dropped by 32.8%. Lacking defense against the unseen but deeply felt financial ghost-strikes, the firms are said to be in talks of a merger with chances of 50/50 of happening, according to sources close to the process.
With negotiations expected to to take another full two weeks according to same sources and a vague official statement release, it's unclear whether the two will end up sharing the same sheets or pick up where they left, on the lane leading to possible bankruptcy. Shortly after the rumors emerged, Executive Communications Director for Chrysler LLC said that the company was looking at “a number of potential global partnerships” as part of their growth possibility expedition while adding “Beyond those partnerships already announced however, Chrysler has not formed any new agreements and has no further announcements to make at this time.”
Despite the announcement, the private-owned Chrysler is likely to go shopping as its market share just as GM's, dwindles by the hour. Chrysler's share has fallen by 4% over the last decade as of becoming part of Daimler while GM's share has dropped from a massive 50% to 22%, reports Autodata.
If a deal will be concluded, the newly-formed firm will become the largest auto-maker in the world, surpassing even Toyota. In addition, the implications would be numerous affecting both consumers and auto-market balance. If merged, the two companies would control over 35% of the US car market while moving to the top as the largest pick-up, SUV and mini van producer.
Salvation may come from this possible team-up although, according to the same close sources, none of the companies have looked into each other's detailed financial books and reports. On the other hand though, vehicles may be rebranded as who-knows-what, sparking confusion among loyal buyers and brand enthusiasts.
Besides the inevitable creation of a frankensteinien corporate entity, the merger could massively benefit from technology exchange and common assembly lines which would ultimately and theoretically lead to increased productivity.
GM is not the only candidate for a partnership with Chrysler as controlling stock-holder Cerberus (who owns 80.1% of Chrysler as of August 2007) may also look into Nissan and Renault.