GM, Chrysler pushing for rapid deal
U.S. automakers Chrysler LLC and General Motors Corp are pushing for a quick merger deal ahead of the U.S. presidential election as sales continue to plummet and they cannot gain access to credit, a Detroit newspaper reported on Saturday.
According to The Detroit News, senior executives at GM and private equity group Cerberus Capital Management -- which bought an 80.1 percent stake in Chrysler from Daimler AG for $7.2 billion in August 2007 -- are keen to wrap up talks before both automakers are weakened further by a sluggish U.S. economy.
Both companies have been losing money. Analysts have estimated that GM is burning through at least $1 billion per month. The credit crunch and the economy have made major banks reluctant to lend to the industry, reports Reuters.
A Chrysler spokeswoman said the company would not comment on the newspaper report. GM officials did not respond to a request for comment.
Both parties are racing to conclude a deal before the election, which is 17 days away on November 4.
There has been speculation within the industry and among analysts that if Detroit's automakers face failure, they may seek a bailout from the U.S. government along the lines of the recent $700 billion package for the financial sector.
It is unclear whether the government would support such a rescue package, but both presidential candidates -- Democratic Sen. Barack Obama of Illinois and Republican Sen. John McCain of Arizona -- may be more likely to promise help for the industry before Americans head to the polls.
The U.S. auto industry accounts for thousands of jobs in Michigan and Ohio, and the latter remains a key battleground state in the upcoming election.
The newspaper report said under one possible scenario, GM would absorb Chrysler to get hold of its cash stockpile -- $11.7 billion on June 30 -- then shut down some of its brands and car dealerships in order to cut costs dramatically.