GM-Ford Merger Mentioned in GM C-Suite and Shot Down

By Chris Haak

06.26.2008

Although it obviously hasn’t come to fruition, BusinessWeek reported this week that some GM executives have thought out loud about the possibility of a merger at Ford. According to BW’s sources, GM’s management’s consensus was that such a huge merger, even if it could pass muster and be approved by both companies’ shareholders as well as the government, would be a huge distraction to GM, who literally needs to focus every ounce of its energy on surviving the next two or three years.

If such a merger ever happened – and I’d consider it unlikely for many reasons – it might solve some problems such as reducing overhead costs and allowing the combined entity to share a dwindling cash pile to sustain the downturn in the US auto market until it recovers. However, it would create so many more problems, such as a proliferation of brands (GM already has too many brands; would adding 50% more brands do anything other the further divert resources from the core products?), redundant products, excess/unused factory capacity, and a lineup that’s far larger, but still doesn’t match the current buyer’s wants or needs.

Although GM hasn’t publicly even confirmed that the discussions/mention took place, it’s safe to say that many GM fans and Ford fans are a bit freaked out at even the prospect of their favorite company joining the “enemy.” I mean, will the Calvin peeing on the other guys’ logo stickers have much meaning if Ford and Chevy trucks are owned by the same company? That would be like a Chevy owner having a picture of Calvin peeing on a GMC logo.

More worrisome, however, is the knowledge that brands would absolutely need to be eliminated; Buick and Lincoln are basically serving the same segment; Ford and Chevy have a lot of overlap; Mercury and Ford already overlap; Pontiac and GMC lineups both consist almost solely of rebadged Chevrolets so are redundant. We’ve seen a perfect case study for what happens to market share when a brand is eliminated – that market share disappears. Just ask GM how many Oldsmobile customers it retained; the answer is almost zero. Buicks and Chevys may have looked nearly the same, and been the same under the skin, but Olds people didn’t want to buy Buicks – they wanted Oldsmobiles. Instead, they traded their Cutlass Ciera/Calais/Supreme/etc. on a Camry, saw that it was a good, reliable car, and they are now out of the GM fold, and GM’s market share is lower than it’s been in decades.

What had been unimaginable just a year or two ago seems to be an ever more likely scenario as panic sets in among the Detroit Three. Just as the last of the independent manufacturers such as AMC merged rather than just closing up shop, absent a dramatic turnaround in the next twelve months, we’ll probably see something similar from GM, Ford, or Chrysler. Some would argue that the beginning of the end of the US auto industry happened in the 1970s, but I’m talking about the actual death of the industry as the endpoint, not the events that eventually got us close to it. However, I really believe that when we see GM and Ford, GM and Chrysler, Ford and Chrysler, or any of the three and a foreign manufacturer merging, it truly will be the beginning of the end of our domestic auto industry. I hope for the sake of millions of workers, not to mention our national economy, that we don’t get to that point.

COPYRIGHT Autosavant.net – All Rights Reserved

Author: Chris Haak

Chris is Autosavant's Managing Editor. He has a lifelong love of everything automotive, having grown up as the son of a car dealer. A married father of two sons, Chris is also in the process of indoctrinating them into the world of cars and trucks.

Share This Post On

3 Comments

  1. The scenario of having a foreign manufacturer who “merged” happened first with Dailmer-Benz with Chrysler (we knew what happened next) and almost 2 years ago, when “Captain Kirk” Kerkorian buyed some steak in GM as an hope to bring Carlos Ghosn of Renault-Nissan on board. Some “similarities” already happened in Canada when Rio Tinto acquired the aluminium producer Alcan or when Coors beers merged with Molson. Or elsewhere like the music industry when Sony Music merged with BMG.

    For AMC, it was more of a takeover then a merger. Or Renault who was at the time the main stockholder of AMC, was forced to drop AMC after multiple attempts to revive it (at the time when Renault was still owned by the French government before its privatization of the early 1990s, its former chairman Georges Besse was killed for multiple factors and wanted to make more investments in the USA. I guess his successor decided the fate of AMC otherwise.

    We knew what also happened to British Leyland. Also to Citroen who was merged with Peugeot but keeped some autonomy.

    But I guess it might not be the ends of takeovers and mergers, Paul Betts, editorialist of the Financial Times suggested then Renault and Peugeot-Citroen should go together. The Renault fans and the Peugeot fans looks at each others as the Ford fan and the Chevy fan. Here 2 articles in French on the French site Caradisiac and Tendances.

    In conclusion, the South Park episode “Smug alert” where peoples buyed the hybrid “pious” car go to a “Toyonda” dealership, could be possible then Matt Stone and Trey Parker might predict the merger of Honda and Toyota in a more or less distant future? 😉

  2. Desperation is producing some strange logic.

  3. I digged the Autoblog archives about some old speculation, more precisely this one: Ford and Chrysler to merge.

    With Kirk Kerkorian getting more parts of Ford’s sharing. We knew Kerkorian dreams of an “alliance” with another automaker. Rumors mentionned often Ghosn but a French article from the French newspaper “Le Figaro” once mentionned then Ghosn don’t want to work in a controlled-company family. However if the Ford family decided to quit and sold their stakes and giving the green light to Kerkorian, the game plans could change.

    I spotted another old article about which path Ghosn might chose between Chrysler and Ford at http://www.christonium.com/automotive/ItemID=11931600594266. Currently with the recent Chrysler-Nissan deal with small-car and pick-ups. He will chose Chrysler unless Kerkorian play a hidden ace or a “joker”.

Submit a Comment

Your email address will not be published.