News

GM, Chrysler talks pick up pace

In the doomsday scenario raising anxiety around the Motor City, General Motors makes a deal for Chrysler, keeps Jeep and the minivans, and vaporizes the rest of the company.

Tens of thousands of Chrysler's 66,409 employees lose their jobs as cash-desperate GM swiftly cuts redundant operations and sheds unprofitable models. Factories and dealerships are closed, and the lights go out at Chrysler's gleaming headquarters.

Industry analysts say GM would have no choice but to slash costs if it acquires struggling Chrysler from its current owner, New York private equity firm Cerberus Capital Management.

Both sides have been talking for months, but the pace has picked up recently. Cerberus wants out of the auto business, and as the credit markets have dried up, GM, worried about running too low on cash before the U.S. auto market rebounds, wants Chrysler's currency stockpile.

A person familiar with the negotiations said the talks have advanced to the point where top executives of both companies have asked for refinements.

In August, Chrysler said it had accumulated $11.7 billion in cash and marketable securities as of June 30. That figure remains about $11 billion, the person said, despite Chrysler's U.S. sales being down 25 percent through September, the largest decline of any major automaker.

Detroit-based GM is burning up more than $1 billion per month, with analysts predicting it will reach its minimum operating cash level of $14 billion sometime next year. GM's sales are down 18 percent, and the company has lost $57.5 billion in the past 18 months.

  Comments