GM and Chrysler Talk Merger After Severe Downturn

By: Mary Couchman
Published: Oct 12, 2008
Updated: Mar 14, 2010

General Motors Corporation and Chrysler LLC held preliminary talks about a possible merger. The two auto makers are on the brink of financial collapse due to the current global credit crises. GM sales have dropped 17 percent while Chrysler has faced a 25 percent decline.

General Motors Corporation and Chrysler LLC are currently in merger talks about combining operations. The outcome could include a full scale merger of the two auto makers.

The two companies have been severely bruised by the sudden downturn in the automobile industry. GM and Chrysler have been hit hard by the global credit crises and the recent pullback in consumer spending. Many consumers are having more difficulties in getting new car loans.

Chrysler sales have dropped 25 percent while General Motors has faced a 17 percent drop this year. GM's share price tumbled to its lowest level since 1950. Analysts say that the company may not be able to weather the current financial downturn.

A GM-Chrysler merger would be historic for the auto industry. It could solidify GM's position as the global auto sales leader which has been in danger of losing to Toyota Motor Corporation.

Toyota and GM finished last year essentially even in vehicles sold worldwide.

According to a recent report by J.D. Power and Associates, the global auto industry might outright collapse in 2009.