As merger talks between General Motors and Chrysler continue in Detroit, experts have warned that if either US car giant fails, the knock-on consequences for the industry could be catastrophic.
It’s claimed that, without a merger and potential cash injection from the US Federal government, two of Detroit’s ‘Big Three’ may go under within a year.
Both GM and Chrysler have announced more job losses. New cars have also been postponed in an effort to stem spending.
GM has delayed the Cadillac CTS Coupe, the Buick Lacrosse and now, crucially, the big-volume Chevrolet Cruze, which has been put back until 2011.
Chrysler is currently locked in a legal dispute with transmission supplier Getrag and has been affected by Fiat’s decision to postpone the relaunch of the Alfa brand.
It’s a move that would have seen the Italian firm co-operate with Chrysler and use its US factories to build Fiat Group cars.
Industry analysts point out that both GM and Chrysler are locked out of the credit market and haemorrhaging cash. The success of a merger between the two now may depend on the scale of US government aid.
“Without government intervention it’s difficult to see how the merger makes sense,” said former Ford executive and business expert Louis Lataif.
GM is understood to have asked the US Treasury for financial help to complete the deal. The automotive giant is entitled to some of a $25bn government-funded, low-interest loan package, originally devised to help US car makers build more economical vehicles.