GM Deal Likely to Kill Chrysler

A potential deal between General Motors and Chrysler may kill the Chrysler brand according to consultation firm Grant Thornton which recently published “The State of Chrysler” report. If the deal goes through, hundreds of supplier companies may be heavily affected, the aforementioned source predicts, with more than 50,000 jobs to be cut. Moreover, from 26 models currently offered by Chrysler, only seven of them may be retained, including Dodge Ram and Jeep-branded vehicles.

Seven of the current 14 Chrysler factories may be closed in case the transaction is finalized, the consulting firm said, with no less than 12,000 workers to be fired plus 12,000 administrative jobs to be cut.

However, such a deal may also have several positive effects, especially thanks to GM's and Chrysler's production capacity of certain type of vehicles. The two companies will become more powerful in the pickup truck class, “displacing Ford as the truck leader,” according to figures published by the same source, with more liquid assets and cost-reduction systems.

"Chrysler as we know it will cease to exist very soon," said Kimberly Rodriguez, principal of Grant Thornton's automotive practice. "At this point, there are very few options available to either company. We believe a transaction between GM and Chrysler is likely because it would be the most expedient way to protect cash and jobs at both companies. If one or the other company were to fail, we would face a much bigger calamity -- the collapse of the North American supply base and the potential endangerment of all three Detroit automakers and businesses that depend on them."