A massive industrial merger between General Motors and Chrysler is close to becoming reality, with both companies appealing to the US government for a huge cash injection.
GM insiders are poised for ‘a major announcement’ in the days immediately prior to the US presidential election on 4 November, Autocar can reveal.
Last night reports from the US claimed that GM chief executive Rick Wagoner had gone to US Treasury secretary Hank Paulson to ask for a government bail-out of $10bn.
GM may have to agree to keep as much of Chrysler’s existing operation in business as possible, if its to get the money. However, the new US president is likely to face the controversy of a Government bailout partly paying for factory closures and redundancies.
Financial pressure on the two carmakers was significantly increased when they were downgraded by credit rating agencies. The upshot is that borrowing money from the credit-crunched markets has become near impossible for the ailing carmakers.
The GM and Chrysler bosses are also dealing with potential knock-on affects to the component supply base should one of the ‘Big Three’ makers fail or a supplier collapse as a result of slashed car production.