GM-Chrysler merger regains traction

Nardelli supports merger as a bailout condition; Wagoner considers it

David Barkholz
Automotive News
December 4, 2008 - 4:04 pm ET

Chrysler LLC CEO Bob Nardelli told a U.S. Senate committee today he would support a merger with General Motors if it became a condition for government support of the Detroit 3 automakers.

GM CEO Rick Wagoner said GM would seriously consider such a condition but that he would prefer such an arrangement be negotiated with the UAW.

A GM-Chrysler merger would save $8 billion to $10 billion a year in a combined company, Nardelli said.

Top GM and Chrysler executives negotiated a possible merger for several weeks this fall, but the talks collapsed Nov. 7 after vehicle sales plunged and the prospects for funding a merger faded.

Responding to questions from Sen. Robert Bennett, R-Utah, Nardelli said the money would be saved through job reductions, plant consolidation and the combining of vehicle development and purchasing.

Nardelli said bringing together vehicle platform development would save $1 billion to $1.3 billion annually. Combining purchasing would save another $3 billion to $4 billion, he said.

Bennett said that the government should consider requiring the merger as a condition of loaning money to the companies. The Detroit 3 CEOs and UAW President Ron Gettelfinger testified before the Senate Banking Committee today for government loans and credit lines to the automakers totaling $34 billion.

Gettelfinger opposed the merger idea because a GM-Chrysler marriage would cost tens of thousands of hourly jobs.

He said Daimler AG's acquisition of Chrysler a decade ago came with similar promises of synergies but failed to produce them.

Nardelli said that if such a deal were made, "The first job to go would be mine."