GM, Chrysler Deep Into Merger Talks

By Neal Colgrass,  Newser Staff
Posted Oct 10, 2008 9:55 PM CDT
A sale sign sits against the rack on which an unsold 2008 Colorado pickup truck sits at a Chevrolet dealership in Lakewood, Colo., on Sunday, Sept. 28, 2008.   (AP Photo)
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(Newser) – GM and Chrysler are quietly seeking a merger deal that would create the world's largest car maker and reshape the auto industry. Talks between GM and Cerebrus Capital Management, which owns Chrysler, have a 50% chance of succeeding, sources tell the New York Times. Other sources say the deal has stalled, but both sides are hungry to merge and would act quickly if markets stabilize, the Wall Street Journal reports.

Cerebrus has offered an exchange in which GM would hand over its 49% stake in GMAC, a weakened auto lender, for Chrysler's automotive operations. GM would cut up to $10 billion in costs in such a deal. A GM-Chrysler company would not only reduce Detroit's Big Three to Big Two, it would sell more than 35% of US cars and dominate US production of minivans, pickup trucks, and SUVs.