GM + Chrysler: What it may look like post-merger
The last 24 hour have certainly brought a great deal of attention to these two Detroit icons.
While
pundits and analysts peer into the future, GMI has already gotten word from inside sources on what a "new GM/Chrysler" may look like post-merger.
First, our sources tell us that GM has "war-roomed" the idea of buying Chrysler a few times in the past. Just like the Pentagon, GM's war room studies every "what if" scenario and they've already done their homework on what a combined auto-giant would look like in the recent past.
When it was made public that the former DaimlerChrysler was looking to spin-off Chrylser Corporation, GM quietly entered into talks to purchase the company from the German automaker. At that time, GM reviewed Chrysler books and crafted a series of plans if a purchase was to move forward. We now know that if GM should buyer Chrysler, some version of these plans will be revived and implemented:
*Make huge reductions in Chrysler white-collar work force (product devlopment, administrative, sales, marketing, etc) and combine the left over operations with GM's own team.
*Eliminate excess Chrysler capcity over time by redesigning and making products on GM platforms and plants. Those plants that closed could be sold off to a foreign automaker seeking to establish a presence in the United States (Fiat, PSA Puegot Citroen, etc) or sold to parts-suppliers.
*Continue to consolidate Chrysler's dealer network. Cerberus has already started on this and GM would look to accelerate it just as they are pushing to do the same on their end. The resulting combined company would end up having a greatly reduced dealer footprint to bring it more in line with their competitors.
*Continue with the Chrysler's ambitions to make both Dodge and Jeep global brands. When Dieter Zetsche was in charge of Chrysler he began this strategy and made some inroads in Europe and China. His goal was to make Chrysler a truly "global" company and wanted to achieve 1 million sales outside the United States. GM would leverage their own worldwide operations to facilitate this faster.
GM crafted much of this strategy as it was negotating with DaimlerChrysler, but the plan ultimately fell through due to the issue of Chryler's underfunded pension and debt. GM didn't want to take on the additional burden. Ultimately, most - if not all - of the Pension obligations resided with Daimler in the end and Chrysler was bought by Cerberus.
This time around, however, many of those obstacles would not derail any arrangement. Behind the scenes, Cerberus has done quite a bit to get Chrysler clsoer to fighting form - and it would make the company a much more appealing partner than it was over a year ago.
However, any combined company would need to be carefully coordinated in order to succeed. Should they move forward, GM would control over 30% of the market - but it would also mean huge redundencies.
Our insiders expect that will mean both Chrysler and GM would have to cut some brands to make the strategy work. The most likely scenario will mean that GMC wold possibly be eliminated since it would create more redundencies with the Dodge brand. Chrysler branded vehicles may also get elminated due to the fact that the Buick brand already serves much of the same customers and has a global presence in larger markets like China.
Hummer we already know is being prepped for sale and would have only overlapped with Jeep. Though, GMI openly wonders if GM were to get their hands on Chrysler, if they would make changing the "seven-slot grille" a pre-condition to any sale? This would mean Hummer's new owners could not use the iconic seven-slot appearnce as both Jeep and Hummer currently do. It should be recalled that GM and the former DaimlerChrysler went to court over this very issue years ago. GM won and the right to use the grille was preserved, but if GM owned Jeep in a Chrysler takeover, would they allow a new competitor to cash in on the signature look? Could this be revisited?
Assuming the company were combined our insider says a four-channel sales strategy would continue and would be established as:
Chevrolet, Dodge-Jeep, Saturn-Buick-Pontiac, and Saab-Cadillac.
This framework would allow GM to continue to build on Chrysler's stengths while preserving their own.
The product sharing potential would almost be intriquing under a new regime:
GM's mid-sized Epsilon II platform could underpin the next Dodge Avenger while the next Dodge Journey crossovers could move to the Theat II platform, creating bigger economies of scale for both companies.
Chrysler's minivan could be shared with Chevrolet and possibly Saturn to give GM an immediate entry into the segment.
GM's DeltaII platform could provide a replacement for the Caliber crossover/hatch and possibly create a proper sedan to anchor the bottom of Dodge's lineup.
And GM and Chrysler together could design replacements for the Silverado and Ram fullsized pickups, the Colorado and Dakota mid-sized picksups and even a slate of SUVs to serve both Jeep and Chevrolet.
All of this, however, would take money, time to iron out, and possibly consume more than a single product cycle to truly be integrated.
We will report more from our insiders as further information becomes available. Stay tuned!!!