MercoPress. South Atlantic News Agency

Talks to consolidate US automakers GM and Chrysler

The Unites States automobile giants General Motors and Chrysler are in talks about a possible merger, according to reports in the US media. Apparently talks have been going on for a month but details of the deal are not clear and neither party has made any direct official comments.

Furthermore the US press also revealed that before GM began exploring a possible merger with Chrysler it had first approached Ford Motor Company. However Ford rejected the idea and ended the discussions last month. The US number two automaker is believed to be planning to sell its 33.4% holding in Japan's Mazda. GM is the US leading manufacturer and Chrysler third after Ford. All have been suffering with a plunge in US sales to 15-year lows in the range of 18 to 24%. Sources told the Wall Street Journal that Cerberus Capital Management, which owns 80.1% of Chrysler, had proposed trading its automotive operations to GM in return for GM's stake in the auto lender GMAC Financial Services. GMAC, the Detroit-based long-time finance arm of GM, is now 51% owned by Cerberus. The group also owns 80.1% of Chrysler, though it is reportedly in talks to acquire the remaining 19.9% from Daimler AG. The New York Times sources spoke of a merger that was a "50-50" possibility, although it could take weeks to finalise and had been stalled by the turmoil in the financial markets. GM spokesman Tony Cervone said: "Without referencing this specific rumour, as we've often said, GM officials routinely discuss issues of mutual interest with other automakers." Analysts have questioned Chrysler's position, given its reliance on North America for 90% of its revenue. Both companies have been hard hit by falling truck and SUV sales and are struggling to push through job cuts against union opposition. GM shares hit a 60-year low this week after posting a second-quarter net loss of 15.5 billion US dollars. The Detroit Free Press reports that the idea of the city's three major automakers uniting has been floated several times in recent years -- often around major auto shows -- without coming to fruition. "But if such a merger were to happen, it would not only reshape the global auto industry but also stand as a landmark moment in Detroit's history". GM talked about buying Chrysler from then-DaimlerChrysler AG in early 2007, before Cerberus acquired its majority stake. In 1996, GM had talks -- largely forced by then-shareholder Kirk Kerkorian -- with Renault SA and Nissan Motor Co. about a possible alliance. Those talks also stalled and Kerkorian, now a major investor in Ford Motor Co., sold off his stake. GM turned 100 last month and has lost almost 70 billion US dollars over the last three and a half years. Cerberus joined the auto industry just before the business headed into its worst era in at least a decade and a half. Both companies have tried to project a lack of panic, however. Chrysler officials insist that targets are being met and that investors are committed. GM issued a statement on Friday saying it has no plans to seek bankruptcy protection.