Here's a QOTD that doesn't involve me pumping gas… Yesterday we heard news that Ford and the General are talking about collaborating on an engine. Today we see that there's a 95 percent chance that one of 'em will go bust sooner than later. They already work together (to some extent) on transmissions and they all share suppliers. So why not just make like Ze Germans and merge? Take VW/Porsche as an example. Volkswagen owns Audi as well as every other non-French make in Europe. And while the whole story is murky, Porsche now owns Volkswagen. So, if Porsche wants a V6 or an SUV they just take what they need. Simple. With Detroit in a perpetual game of chase the Japanese, wouldn't it make sense to own up to their failings (stop laughing), pool their collective resources and start really competing on a worldwide scale? Instead of three full-size pickups, offer just one. Fusion, Malibu, Sebring (OK, you can laugh at that last one)– none are as good as the Camcord and they only steal sales from each other. Besides, the Fusion and Sebring are essentially rebadged Japanese cars anyhow. With one big Detroit taking its A game to the world stage, at least they'd have a chance. Right?
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And………..we could get Ricky and Bobby to run the whole thing. Marvelous.
Do you honestly think they could swallow their pride and pick one full-size pickup to run with?
And how would they deal with the dealers? GM can’t afford to cut the size of their network now, how could a merged company possibly hope to do the same.
The only way I could see it is if two went tango uniform and filed C11 at the same time, then made a merger part of the restructuring plan.
Put Mullaly in charge and they might have a prayer.
Now let’s see in our small town (2000 pop) you can buy Ford, GMC/Chevy and Dodge trucks.
What if they were merged and you could buy the same truck from all of these dealers?
It seems to me, you have not eliminated the over-representation of sales outlets by giving them the same product. I think a lottery would be better, GM, Ford & chrysler would flip to see who will build trucks period. The other two would cease and desist and their corresponding dealers would just well die.
At least we give them all a chance to win the toss and continue building trucks. Then we do the same for SUV’s, Vans, Sedans, etc.
In other words, we just no longer need all of the full line production that comes from these three American builders. Will this happen, well yes but through Chapter #7 not a coin toss.
I could very well see a merger in the future for GM and Ford, especially in engineering. How about building a car with a GM Quad-4 engine and a Taurus transmission ?. At the very least it would guarantee job security for the mechanics at the dealers service departments.
If they merge, they would only have to file BK once instead of three times. Sounds like MCM credit at Chryco.
How do you at TTAC feel about merging with your competitors?
Just sayin’
iNeon:
If we could stay TTAC and absorb Autoblog or Jalopnik’s audience, yes!
As long as we’re fantasizing, how about this:
The first one of the 2.# that stands up and says ” We know that we have sold many substandard vehicles to unsuspecting customers. We also treated many of them badly when they came back for care. All the while, putting the screws to our suppliers so that we could pay our workforce, our dividends and our bk-proof pensions.
We are sorry. We promise to do better”
…gets a Get-Out-of-Bankruptcy-Free card. Everyone else – better luck next time.
Mmmm… three dysfunctional corporate cultures, three disparate engineering squads, four times the debt, 6 times the lawsuits, 8 times the number of models they need.
Makes AOL Time Warner look like a super idea even in hindsight.
Would a drunken man have a better chance of making it across a busy highway if tied to two other drunken men?
Hey, they could rename the merged company “American Motors”!!!
As someone else has posted, “Do we really want to have an American Leyland?”
Only difference being that no one has mentioned government ownership or subsidies for such an entity…but I’m fairly confident that both of those outcomes wouldn’t be terribly far behind.
After reading this, my mind recoiled in horror. These organizations are so byzantine and consumed by internecine warfare as it is now. Imagine the bloody politics and turf battles….It was bad enough in Motown when the News and Free Press merged…..
Maybe they could get Kwame Kilpatrick to run the combined companies….
“Fusion, Malibu, Sebring (OK, you can laugh at that last one)– none are as good as the Camcord and they only steal sales from each other.”
I haven’t driven the ‘cord, but have rented numerous Cam’s as well as both non-laughable domestics, and, apart from supporting your rhetorical flourish, can’t see how you can say that “none are as good.” Or even “none is as good.” Unless by that you mean both are better. Which they is.
They can’t even merge their own overlapping product lines: GM-Chev-Pontiac-Buick-Saturn…
Magnify that by a thousand…
I’ve lived through 5 mergers (I got laid off after two of them so perhaps I am biased). If these guys want to hasten their demise, that’s the surest route possible.
No, they still can’t do it. 0+0+0=0.
“Volkswagen owns Audi as well as every other non-French make in Europe.”
Hold on a minute there. The Italian auto industry is essentially all owned by Fiat in which VW plays no part. BMW-Mini-Rolls is a substantial player w/o VW involvement. Daimler-Benz is also unaffiliated with VW. GM and Ford both have major positions in the European market. VW is certainly huge in Europe, but they hardly have the market to themselves even if you ignore Renault and PSA-Peugeot-Citroen because they are French.
Now to the question: No. Merging the 2.8 would create one massive dysfunctional company with most of the problems of the predecessors plus new ones. Study the history of British-Leyland carefully before even thinking of such a move.
Lets see –
GM will handle customer relations, car branding, adding dealers, and executive pay.
Ford will handle foreign purchases.
Chrysler will handle supplier relations.
Seems like a winning idea to me.
““Volkswagen owns Audi as well as every other non-French make in Europe.”
Hold on a minute there. The Italian auto industry is essentially all owned by Fiat in which VW plays no part. BMW-Mini-Rolls is a substantial player w/o VW involvement. Daimler-Benz is also unaffiliated with VW. GM and Ford both have major positions in the European market. VW is certainly huge in Europe, but they hardly have the market to themselves even if you ignore Renault and PSA-Peugeot-Citroen because they are French.”
Basically VW owns Audi, Seat, Skoda, Bugatti, Bentley, and Lamborghini (once removed, owned by Audi). (Did I forget one?) That’s quite a few name plates, but as for volume or relative cashflow, the last three basically don’t count in comparison to the others. Seat and Skoda are for the most part VW clones using more or less identical machinery at a lower pricepoint and cutting into mainstream VW profits as such (very much like GM in fact). Audi has been a VW subsidiary for decades since they were sold by Mercedes and until relatively recently has been suffering for it. Porsche and VW+Audi have had joint marketing and engineering agreements for decades since well before the Touareg (914, 924/944, Audi RS2, while even doing assembly for others (see Mercedes W124 500E). Many manufacturers collaborate on individual component projects such as engines and trannies, while often buying exactly the same devices from third party suppliers (Bosch, ZF, Jatco, Ate, TRW, etc. – I don’t mean exclusive components but items that are identical being used between different brands -steering racks, transmissions, braking systems etc.)
Basically, collaborating makes perfect sense in order to spread the development costs around. It does not mean that the companies might as well merge. While no fan of the Cayenne, I am fairly certain that is is not just a case of taking a VW and slapping a Porsche crest on it. That thing was developed jointly and if anything, the Porsche is by far the better vehicle relative to the VW irrespective of the pricepoint. The base V6 option on the Cayenne? – Alright, I will concede that one, but hey, extra units is extra profit- when you can take a massproduced cheap engine and get that kind of markup, go for it plenty of people out there willing to pay for the name. In Porsche’s case, buying VW/Audi does make some sense – It’s not getting any cheaper to develop cars, tapping into a huge body of engineering talent is useful, being able to possibly head off local competition makes sense for them (R8, upcoming R4 vs 911/Boxster) and being able to reap the potential profits of units in market segments that Porsche does not compete in is good for them. They just need to be careful that the tail does not start wagging the dog.
I got a little off topic, but there was a lot of room on this one…
No
NO a merger of like minded idiots will only bring the end sooner. Who’s broken business model would they pick to run with. The turf wars would make Iraq look like a playground fight, combinded debt I sudder the thought, and who would lead. We all know Rick would NOT step down, he would be running all 3 companies into the ground. Then you get in to combined products and dealers. What would our relatively small town do with 5 combined GM/Ford/Chrysler dealers selling 150 different model cars, ohh I mean SUV’s and trucks. A least as they are now at least one will probably survive put them al together and you get certain death very quick and no man standing at the end of the day.
The complete irony of the Sebring being a “re-badged Japanese car” is that the last two generations of Chrysler midsizes were much more competitive for their time, and they (the sedans, not the coupes) were all American.
And no, all of them merging is probably the worst idea I’ve heard. Ford and Chrysler I think can both “make it”, provided they don’t run out of money first. GM still isn’t doing anything different and is just digging the hole deeper and deeper, but they’re big enough that they’re might be something left after the final fallout. I guess we’ll see.
Merge? Are you kidding me. I mean, forgetting first that despie their shrinking size, they will still be the #1, #3 and #5 companies in the U.S. and forgetting that GM and Ford will likely end up the #2 and #4 in the world. Just why? It actually doesn’t solve any underlying problems: UAW, suppliers that are struggling to shrink with UAW labor forces, replication of function across regional groups, etc.
There is a great article in Businessweek – an interview with Bill Ford. When they ask him about mergers, he said that Ford needs to be focued on merging with itself. Basically, there are billions in cost that can be shed internally by not replicating work in every regional organization when you can share many designs, parts, engines, etc all over the world.
Then there has to be the fundamental realization that each company is in a completely different stage of restructuring. Chrysler is struggling with liquidity and basically acting as if it has no cash left in the bank (which it probably doesn’t). There is no product to speak of. GM is only slightly better off financially but at least has a better pipeline. Ford is in much better shape than either company with vastly more cash versus burn and may actually have the best pipeline out there. While Cerberus may be looking to offload parts of Chrysler, Ford doesn’t want them and GM couldn’t merge even it wanted to. There’s just not enough liquidity there. GM and Ford would never merge – they’re just too large worldwide. Ford’s sales are double Honda’s worldwide. GM’s are four times. If Honda can operate standalone, then so can GM and Ford. We can’t forget that both companies have vast global operations.
Joint-ventures are one thing. Many companies use them and they can be effective if run well. However, they are a FAR cry from a merger, which includes not just product but administration and labor force. By this logic, Toyota and Honda should merge because they have the same profile of customers wanting the same appliance. But it’s just not a good idea practically.
There is a certain amount of humor in the idea.
The idea of merging is interesting, but more than likely will never happen in any form of reality. Although, instead, GM and Ford could and are doing joint efforts instead to promote and build new transmittions, maybe work on hybrids to and if Ford is lucky, they could get their own version of the Volt to.
But as a merger, that would tear what they have left apart including customer loyatly, since there are some people who wont buy one or the other and still stay with either one of the two. In the long run, no one would benifit from anything to outcome of such a merger.
“wouldn’t it make sense to own up to their failings (stop laughing),”
This made me chuckle for quite a while.
Jeez, I hope this never comes about.
Nobody wants Chryco’s product lines. What, another three domestic brands and a fat dealer network? For what? A new truck design? The Avenger?
And the Ford family doesn’t want GM. They are in control. And Ford is ahead. They will be the last domestic standing. Why would they want to tie themselves to GM?
Actually, this isn’t as bad an idea as it first seems.
If everyone at GM, Ford and Chrysler put their egos to one side and concentrated on their strengths, this conglomerate could be Japan’s (and everywhere else’s) biggest nightmare.
Firstly, Chrysler has Jeep. A brand which is strongly defined in the SUV market. Now I know it’s a dying segement, but petrol is coming down, slightly and I think there is still some cache left in that market.
Ford has the best reliablity and quality ranking out of the Detroiters, plus, their Euro cars and Alan Mullaly. Also, they have quite a lot of respect across other carmakers which could be useful in creating partnerships.
GM’s trucks (i.e Silverado) are good technologically, but branding-wise, are in a bit of a mess. Which is where Jeep’s (or Ford’s F-150) brand could help. Plus, their luxury marque of Cadillac is the most defined and renowned (at least in NA) with the brilliant Cadillac CTS as flagship.
If you took the cost cutting ability of Robert Nardelli as CFO, Bob Lutz as “car guy” (he does know cars better than most Detroit based execs) and kept Alan Mullaly as CEO to rein those in when needed, then their top management would be quite formidable.
The trouble is (as I stated) earlier, it would rely on everyone working together, an ability which passed Detroit by a long time ago (Alan Mullaly is still having trouble getting HIS management to work together). Otherwise, I think there is definitely some benefit to this idea…..
Dont’ you think these companies have enough to do trying to survive – putting a merger in place would consume vast amounts of management time (and money for the necessary lawyers). And as Katie said – there’s the egos to contend with – not just those of the people at the very top, but the middle ranks who suddenly see the pool of competitors for the next promotion double or treble.
Absolutely not. Just how many brands would that be?!
The D3 together don’t have the market share that GM had 50 years ago, so there should be no anti-trust problem.
It makes sense not to compete against each other (Fusion vs Malibu – Focus vs Cobalt) I think maybe just GM and Ford should merge. I don’t see what Chrysler brings to the party – ok, Jeep, but GMORD is capable of making 4wd vehicles.
It might even force a change in coroprate culutre.
I think it makes sense on paper – except the aforementioned dealer problems. Could it really be made to work?
What would be the point? One big rock sinks as fast as three small rocks, maybe faster.
If a merger made no sense when they were healthy, why would it make sense when they are terminally ill? Because misery loves company?
There is only one leader that appears to be competent.
The incompetents have not shown any sign of stepping aside for better men or women.
Ford has a chance.
The others simply haven’t woke up to the fact they are dead.
A merger would only create a “mutually assured destruction” scenario.
Bunter
Ford has a chance.
The others simply haven’t woke up to the fact they are dead.
First merger of any of the three is absurd (dealer problem just the first of many).
Ford is all of a sudden brilliant? Mortgaged to the hilt? Mullaly is going to save them?
Time will tell, but until the “domestic” consumer starts to purchase automobiles (foreign or domestic). It will be a race to the bottom for all manufacturers.
I’m both a Toyota dealer and a full line GM dealer. The “domestic” consumer had better learn to purchase items that built with “domestic” labor.
With one big Detroit taking its A game to the world stage, at least they’d have a chance. Right?
What RobertSD said, exactly!
These inept organizations which hire incompetent buffoons to run them will never go for this. It requires the forward thinking that the 2.5 have repeatedly shown they are incapable of doing. This applies particularly to GM and Chrsyler because Ford has shown some common sense as of late. Still, the merging of at least 2 has a good chance of happening within 10 years, but it will be a messy happening. The pattern of these jerks is to hit rock bottom before doing anything. On another topic, does anyone know how much loss (including their ever present “one time charges”) GM has reported since F–tface and Duhtz took over? Just wondering how they keep their jobs.
American Leyland! Excellent. Maybe we could get a retro remake of the allegro.
A merger such as this one won’t address two of the biggest issues faced by the big 2.8.
First, the obvious issue of domestic labor costs, particularly benefits. The foreign transplants (those producing vehicles in the U.S.) aren’t saddled with the legacy costs of pensions and so forth, which would remain even after a merger. While GM and Ford have some ability to shift production outside of the U.S., this isn’t particularly good for the economy, nor their image; however, this isn’t a viable alternative right at present due to the weak dollar and a lack of production capacity.
Second, as is frequently mentioned there are entirely too many dealers, and unfortunately the competitive nature has led to an environment where customer service is often appalling. Add to this the fact that the product lines are basically duplicated at many locations, and you have confused salespeople trying to sell dozens of models that are barely distinguishable from one another. Add to that the fact that the majority of up-and-coming buyers are accustomed to buying semi-customized products off of the Internet (think laptops and other electronic gear) and you’ve got a perfect storm for driving customers away.
No, the whole system needs to be re-thought from the top to bottom, if the current dealer lobby ad the UAW would allow it to ever happen. Start by finding a way to allow the customer to choose a vehicle (or “build” one) online, and arrange delivery to a local dealer, who would serve more as a prep and service point. Banish rebates; if there’s trouble moving inventory, adjust the prices on the website to spur demand. As for the UAW, well, that’s a whole ‘nother can of worms.
Hey, they could rename the merged company “American Motors”!!!
If Chrysler were the dominant partner (not bloody likely) it would be American Motors. Or maybe call it Rambler American. Bring back an old small car for a new day: the Nash Metropolitan.
The blind leading the stupid?
They don’t have enough decent product between them to make 1 good car company.
Though, if merged, it would a lot easier for Tata to buy them in a couple of years.
KatiePuckrik :
Actually, this isn’t as bad an idea as it first seems.
If everyone at GM, Ford and Chrysler put their egos to one side and concentrated on their strengths, this conglomerate could be Japan’s (and everywhere else’s) biggest nightmare.
Your first line is negated by your second. The egos have been the problem.
dpeppers :
Ford is all of a sudden brilliant? Mortgaged to the hilt? Mullaly is going to save them?
Time will tell, but until the “domestic” consumer starts to purchase automobiles (foreign or domestic). It will be a race to the bottom for all manufacturers.
Considering the current ‘liquidity problems’ and the current credit woes, Ford securing as much cash as possible when it was available was a Good Thing.
I want to state for the record that I’ve been in favor of American Leyland for a while now. Then all the union-haters can really blame ‘industrial action’ for the downfall of the American automobile industry. Awesome.
All three are merging with the likes of Studebaker, Hudson, Packard, Nash….
Combine three six-foot holes and you get one giant 18-foot hole with no possible escape.
Bankruptcy will “right-size” each of them to an appropriate size vis-a-vis their market share. In the case of Chrysler, that size may be zero.
There are already too many brands, too many dealers, too many products, but not even good products. These kinds of problems can’t be fixed through a merger, they would only be made worse.
There are already too many brands, too many dealers, too many products, but not even good products. These kinds of problems can’t be fixed through a merger, they would only be made worse.
Could you imagine the Cobalt badge engineered into a Ford, Mercury, Dodge, and Jeep? How about a Saturn version of the Fusion? And that Sebring/Avenger would look GREAT with a Pontiac split grill…
Two words:
British Leyland
We talk a lot about the 2.8 learning from their history. Well, don’t forget the rest of the world’s history.
http://en.wikipedia.org/wiki/British_Leyland
re: “toxicroach / August 5th, 2008 at 8:54 pm
Mmmm… three dysfunctional corporate cultures, three disparate engineering squads, four times the debt, 6 times the lawsuits, 8 times the number of models they need. Makes AOL Time Warner look like a super idea even in hindsight.”
“Hoosier Red / August 5th, 2008 at 9:03 pm
Would a drunken man have a better chance of making it across a busy highway if tied to two other drunken men?”
“enderw88 / August 5th, 2008 at 9:15 pm
Hey, they could rename the merged company “American Motors”!!!”
three in a row. right on the mark. truly, more wit and wisdom than any other website i read. seriously. that’s why i love this site and why i keep coming back for more.
Let them merge then we only have to face one bankruptcy crisis in the future instead of two!