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December 18, 2008

GM and Chrysler Shut Down

Is General Motors and Chrysler in merger talks? This rumour was doing the rounds again yesterday, following a report in the WSJ. GM denied this was the case, with a spokesperson stating ” I can say unequivocally we are not in any merger talks with Chrysler”.

Manufacturing shut downs: GM halted production of the Volt and is also planning to idle 20 other plants for up to one month. Ford has extended its holiday shutdown period by at least a week. Chrysler has announced that it will extend the annual two week shut down to a minimum four week shut down starting today.

President Bush stated he wanted to avoid a “disorderly” bankruptcy, but also that he was concerned about putting good money after bad and that he hadn’t made up his mind on a plan. Analysts continue to view the most likely result as some form of monetary aid to keep the auto makers afloat to the new year when it becomes the problem of a new administration, with an ‘orderly’ bankruptcy filing sometime in Q1 looking more likely.

Chrysler finance may temporarily stop lending: according to a letter to Chrysler dealerships with the CEO of Chrysler Financial, Chrysler will be forced to halt lending in the near term of Chrysler dealers continue to tap credit to finance the purchase of new vehicles at the current rate.

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