Detroit, Michigan – In separate statements, General Motors and Chrysler have confirmed that the companies have set aside merger talks that could have seen the two automakers combined.
In a statement, General Motors said that it “has recently explored the possibility of a strategic acquisition that it believed would generate significant cost reduction synergies and substantially strengthen GM’s financial position in the medium and long term, while being neutral or modestly positive to cash flow even in the near term. While the acqusition could potentially have provided significant benefits, the company has concluded that it is more important at the present time to focus on its immediate liquidity challenges and, accordingly, considerations of such a transaction as a near-term priority have been set aside.”
In a statement, Bob Nardelli, chairman and CEO of Chrysler LLC, said that “as we have previously stated, Chrysler LLC neither confirms nor discloses the nature of its private business meetings, as many times they do not come to fruition. Returning Chrysler to profitability continues to be the key focus of the management team. We are significantly challenged by today’s economic environment and by the automotive industry’s unprecedented downturn. As an independent company, we will continue to explore multiple strategic alliances or partnerships as we investigate growth opportunities around the world that would aid in our return to profitability. As we’ve shared, we appreciated the opportunity to meet with Speaker Pelosi and her leadership team, as well as with Senate Majority Leader Reid to discuss the challenges facing the industry. We are encouraged by their understanding of the importance of the automotive industry to the economy and we look forward to working with them on these issues. We would also like to acknowledge that UAW president Ron Gettelfinger was present at these meetings and added his support.”
GM’s statement was part of a larger announcement that the company is taking further actions to improve liquidity and reduce structural cost, including the possible sale of Hummer, ACDelco, a technical and manufacturing centre in France, and other potential asset sales; a reduction in capital spending in 2009 from approximately US$7.2 billion to US$4.8 billion through delaying some vehicle programs by three to 12 months, deferring capacity expansion projects, and lengthening product life cycles; reducing sales promotion spending; reducing dealer network activity support; and further revisions to production scheduling, with North American production scaling back beginning in the first quarter of 2008. The company will also cut back on discretionary spending such as travel, the use of consulting resources, and non-scheduled overtime for hourly and salaried employees; however, GM said that spending levels for the Chevrolet Volt and other fuel-economy improvement initiatives have been increased.