Thursday December 18, 07:07 AM
Chrysler wants to revive merger talks with GM: report
WASHINGTON, (AFP) - Troubled US automaker Chrysler hopes to reboot merger talks with General Motors (NYSE: GM - news) as both companies grapple with imminent collapse, hoping for a federal government rescue, the Wall Street Journal reported Thursday.
The hope to restart talks could be a bid to show the administration of President George W. Bush, currently considering a 14-billion-dollar rescue plan for the industry, "that it wants to cooperate in restructuring the industry," said the daily.
A merger could also "offer the firm a way to protect its stakes in two distressed auto-finance companies," said the Journal.
Citing people familiar with the discussions, the newspaper said Chrysler's owner, Cerberus Capital Management LP, "is eager to make concessions in order to arrange a combination of Chrysler's finance arm with that of GM."
A way for Cerberus to make concessions "could be to give away some of its principals' stakes in Chrysler as part of a broader restructuring," according to the report.
It is unclear what effect restarted talks could have on the political considerations for a rescue package.
On Wednesday Chrysler said it was temporarily halting its manufacturing for at least a month, beginning Friday, in response to the credit crisis and ongoing debate on a rescue for the sector.
"As a result of the financial crisis, the automotive market remains depressed due to the continued lack of consumer credit for potential buyers," the privately held firm said in a statement.
"Last week several automakers announced significant downward adjustments in production for the first quarter of 2009, and to make sure our inventory remains aligned with market demand, Chrysler will also extend the holiday shutdown already in place."
As a result it said that "all Chrysler manufacturing operations will be idled at the end of the shift Friday, December 19, and impacted employees will not return to work any sooner than Monday, January 19, 2009."
Chrysler said it had informed the United Auto Workers union, employees and suppliers about the actions.
The company said that dealers have indicated "many willing buyers for Chrysler, Jeep and Dodge vehicles" but have been unable to close the deals, due to lack of financing.
Chrysler has 14 assembly plants, 10 powertrain plants, four stamping operations and five manufacturing affiliations outside of North America.
GM last week announced it was idling 30 percent of its North American production.
The Detroit Big Three -- GM, Ford and Chrysler -- have repeatedly warned that without a package of loans, millions of jobs could be lost, which they say would have devastating effects for the nation's already stumbling economy.
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