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Dumbest Merger Idea in 2007
5-Mar-07 [ by Larry Chao ] 4839 Read and 1 Comment

Rumor has it that General Motors is flirting with buying DaimlerChrysler?s U.S. subsidiary Chrysler.

That would be one of the dumbest business decisions I have ever heard.  Those in favor of a merger argue that combining the two companies would rid GM of a fierce rival and would allow it to negotiate health-care cuts more effectively with the labor unions by threatening to shut Chrysler plants. 


These are silly arguments.  First‚ Chrysler is no longer GM?s problem.  Toyota and Honda are.  GM must figure out how to sell cars against the right competitors.  Second‚ if GM can?t close its own plants fast enough‚ what makes anyone think they can close Chrysler?s plants any quicker?


If GM buys Chrysler‚ it will create a combined mess of poor selling brands‚ an excess of car dealers‚ a nightmare of pension liabilities and more overcapacity.


GM must face reality.  It has failed to fix itself.  But finding a solution by buying another beleaguered auto company is just plain stupid.

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