General Motors can't get help to buy Chrysler, may not buy Chrysler

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Chrysler didn't loose that much

Like a teenage drag race, it seems the Camaro has stalled in 3rd while trying to overtake the Challenger. Now it also looks like dad is not going to buy a new clutch for the Camaro.

General Motors was looking for about $10 billion in government aid specifically to help facilitate the merger (acquisition) of Chrysler. Although not officially announced, sources involved with the talks have said that the Bush administration is done coughing up cash for the auto industry .

This means GM is now getting shy about courting Chrysler. The door is now open for the other offer on the table, the twenty percent buyout by the Renault-Nissan Alliance. Unlike the GM buyout, which would likely mean the death of most of Chrysler’s products, annexation into the alliance would likely give Chrysler access to new cars. When Renault took a controlling interest in Nissan Nissan in 1999 (it was called an alliance to soften the public’s perception of the companies,) Carlos Ghosn, who’s now CEO of both companies, slashed budgets but also shared technology so that new cars could be quickly built at Nissan.

The new problem is that Nissan may not be healthy enough to buy a stake in Chrysler. Today Nissan cut its profit outlook in half. It has reduced production by 200,000 units this year and will trim 3,500 jobs in the United States, Spain and Japan. Renault is already in debt, so it is certain that it will not be able to pay for Chrysler.


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