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Saturday, May 07, 2005


Bob at Cars!Cars!Cars! predicts that GM and Ford will have to merge to survive. This is an interesting idea, and makes a certain amount of sense, from the outside--the last stand of the All-American Manufacturing Giant. However, to pull it off, they would basically have to go bankrupt first. GMF would need to be lean and mean--the combination of GM and Ford's best products, not the combination of their legacy costs and union contracts.

I see another likely merger between Ford and a foreign competitor, such as Honda. Ford would be a good acquisition for a company that wanted to buy its way into the light truck and commercial vehicle market. Honda-Ford would have a lineup of world class compact cars, light trucks, and commercial vehicles. The problem is, how would Honda handle the UAW?

As a side dish, maybe Delphi and Visteon would merge too--Delpheon. Quick, somebody trademark that.


Big Ford Fan said...

All the Media Hype aside, do you really see Ford or GM going out of business? I don't, maybe I'm a simple man, but I don't see them going under completely. Ford has been through tough times before and has bounced back. GM may need to trim some of the fat, maybe loose Buick or Saturn, but again I don't think it's time to write them off. When I was younger I often heard the words "as goes General Motors, also goes the US economy" I think some auto journalist need to remember that if either Ford or GM "go under" a large number of Americans will be out of work and our economy will tank worse than they can imagine.

What do you think? You work in the industry, can you take this talk so lightly?

The Auto Prophet said...

I don't take it lightly... things are bad. The "big 2" keep laying off engineers.

No company is too big to fail. Big Steel went down, the airlines are barely making it. The sad truth is, GM or F could be next, if things don't go right.

BillF said...

Chrysler would have folded some years back too, if the goverment hadn't bailed it out. Would the feds step in again for the sake of the economy?

Big Ford Fan said...

The Government will never again bail out the auto industry. Public opinion wouldn't allow it, and that's what drives them. No matter how bad the economic outlook, the Government would be afraid of the bad press.

The Angry Engineer said...

I see no reason to hope for a government bailout - that wasn't offered to the steel industry, and the airlines have pretty much been told flat-out that Uncle Sam won't help them.

While I don't see enough room in the market for all of the current manufacturers and thus a high likelihood that either GM or Ford (or both!) will be gone by the end of the decade, I also don't see how a merger would help either company. Both are top-heavy with trucks and SUVs, relatively weak in the pass-car market, and carry the same legacy costs. I just can't see anything happening beyond doubling the size of their problems.