The heads of the Big Three left Washington, DC empty handed, and the prevailing mood is that they failed to win over enough converts to their side. Bankruptcy at GM is now looking like a likely possibility, and the same might be said for the other two, only a later down the road.
It seems Chrysler is still holding out hope for a bailout, and then it hopes to do a merger with GM — an idea that had gone away for a few weeks:
FT: Chrysler hopes to revive merger talks with General Motors once a government bail-out package for Detroit’s carmakers is agreed allowing the two companies to address their immediate liquidity problems.
Talks between the two companies were “still going on at a very low level” and would be restarted “immediately” once terms of a bail-out were approved, a person familiar with recent discussions told the Financial Times on Wednesday.
It’s odd how they keep using the word “once” a deal is approved, rather than “if”. We’re not sure if that’s the writer or the leaker. If it’s the latter, we admire their optimism.
Either way, the lesson is that Chrysler knows it doesn’t have much of a future in its current form. It’s not a global company, and its market share doesn’t afford it adequate scale. Even with cash from the government, it needs another arrangement.
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