Possible Auto-merger?

Yesterday was a black day for the three CEO’s of the auto industry in Detroit; Ford’s Alan Mulally, GM’s Rick Wagoner and Chrysler’s Robert Nardelli met with the Senate in Washington DC to ask for help from the politicians. After a four hour long debate, where the three CEO tried to sell the idea of a crisis loan to the auto industry of 25 billion USD, the negotiations were postpone to continue tomorrow. “This is about so much more then only Detroit, it’s about saving the economy of the US from a possible catastrophic collapse”, was one of the things Rick Wagoner said in order to gain sympathy from the Senate. However, the three CEO’s did not receive much sympathy from the Senate; at one point during the questionings the Senate asked the Detroit CEO’s to raise their hand if they would sacrifice each of their private jets that they flew to the meeting with, none of them raised their hands. So are the three Automakers really so broke? Or do they only see an opportunity to get some money to invest in their companies? Maybe they have to reconsider their priorites a bit, soon they might not even have a private jet anymore.

Furthermore, there has been a rumor going around, whether there would be a merger between the big Automakers. What would the Senate think of that? And how would it effect the States? In my opinion I don’t think a merger would be the ultimate solution; it will just make their problems bigger, the logic goes that if they merged the combined company would control 36 percent of the US auto market which would prevent it from failing. Since when does combining two large companies, that are both incompetently managed, guarantee success?

The Auto industry seems to have been caught with their fingers in the cookie jar, just like the banks with the bad loans. They do not have a plan B for the future, just cars waiting to be sold.