We’ll trade our garbage for your garbage

GM and Chrysler ‘in merger talks’

Sources told the Wall Street Journal that Cerberus Capital Management, which owns 80.1% of Chrysler had proposed trading its automotive operations to GM in return for GM’s stake in the auto lender GMAC Financial Services.

The New York Times’s sources spoke of a merger that was a “50-50” possibility, although it could take weeks to finalise and had been stalled by the turmoil in the financial markets.

GM spokesman Tony Cervone said: “Without referencing this specific rumour, as we’ve often said, GM officials routinely discuss issues of mutual interest with other automakers.”

Analysts have questioned Chrysler’s position, given its reliance on North America for 90% of its revenue.

So let me get this straight: they’re going to trade factories that make cars people don’t really want for a huge lender that’s smack in the middle of the credit meltdown.

What this and the rest of the auto industry’s convulsions show is that it would have been really great if the US had an industrial policy that went beyond “Golden parachutes for all my friends!”

It’s been axiomatic for 20-plus years that the global auto industry has a huge overcapacity, even with plants continuing to shut down. Cars last so damn much longer, fewer people in the industrialize world can afford multiple new cars per household, it just ain’t happening. But instead of being able to negotiate reductions coupled with retraining subsidies, new investment in other tech, blah blah blah, we’ve been playing a combination of beggar-thy-neighbor and Last Man Standing. And with the high cost of staying in the game at all, that’s a really big pile of wasted money and labor that could have been doing useful stuff.

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