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GM to absorb Chrysler - as Chrysler absorbed AMC?by Andrew Ganz
A source close to the General Motors/Cerberus Capital Management discussions over the fate of Chrysler LLC said that one scenario currently under discussion is that General Motors would swallow up Chrysler in the way that Chrysler swallowed up American Motors Corporation more than 20 years ago. The Big 3 would become the Big 2, as the Big 4 became the Big 3 in 1987.
A source close to the talks told the Detroit News that GM looks at Chrysler as "excess capacity" in the industry. Chrysler's 1.5 million vehicles are sign as a crutch for GM (as well as Ford) in Detroit and absorbing the automaker would eliminate a competitor for GM and give them access to a few key assets, namely Jeep but also the company's minivans and the Ram pickup.
Once again, the venerable Jeep brand is being considered the biggest target in the deal. Chrysler's interest in AMC's assets was almost entirely over Jeep and its then-new Cherokee. Though fuel prices have skyrocketed since 1987 and consumer interest in gas-guzzling SUVs is declining, most analysts seem to agree that the Jeep brand is still quite valuable.
Analysts told the newspaper that the takeover would be nothing like the 1998 acquisition of Chrysler by Daimler-Benz AG. That deal left the Auburn Hills, Michigan, automaker as a separate division. This rumored deal would likely see the elimination of the historical Chrysler and Dodge brands.
Interestingly, Renault still fits into the situation - as it did in 1987. At that time, Renault agreed to sell its 46.1 percent stake in AMC to allow Chrysler to fully absorb the now-defunct automaker. Today, Renault- Nissan's Carlos Ghosn is said to be increasingly interested in making a deal for control of Chrysler.