GM rumored to be looking at buying Chrysler:

The rumor mill is just humming with talk of GM buying Chrysler. This would be a huge deal and would change the dynamics in the global auto sector. The notion that the largest car maker in the world would buy the third largest is quite intriguing.

If this deal does go together it will create a flurry of auto mergers just so that the other car makers don’t get buried. The deal would likely be the final nail in the Ford coffin and force the company out of business. Ford has not been nearly as aggressive in making changes as it should have and I believe that none of the other auto makers would be willing to take on the risks of merging with Ford at this point.

The potential for a massive change in the auto sector is very high if this first deal gets finalized. The rush to achieve similar economies of scale will be dramatic. The rationalization of plant and personal will be massive as well. The layoff numbers we have seen recently will be nothing compared to the potential layoffs that will be planned due to the consolidation of the entire global industry.

The only way this deal makes any sense is if the newly merged company reduces duplication and cuts the number of models down to only a couple of dozen not the 100 or more currently available. I wouldn’t want to be in the auto parts business if that happens.

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