ONE CAR COMPANY - AMERICA'S BEST ANSWER?

Over a week ago, we posted on this site about the possibility of two, or even all three of the Detroit Three, GM, Ford and Chrysler, merging in some fashion.

Now our prediction is coming to life, a prediction based on our analysis of the realities of the world's economy and the auto industry. And one more, newer reality: That no company is, as the Los Angeles Times was still calling GM and Chrysler on Friday, "too big to fail."

GM and Chrysler are talking merger. Ford is publicly denying any merger interest, but the Times  of London website reported late Saturday night that Ford has also quietly approached GM. (Above, Dodge's 1997 Copperhead concept turned heads at car shows across the country, but with a car called Viper still in production, and which is now for sale, the financial case for a production Copperhead couldn't be made; Center, Mazda's Kiyora concept, on display this week at the Paris Car Show, Below, the 2006 version of the Ford Escape, the only Ford currently available with a gas-electric hybrid engine).

If the Detroit Three were to merge into one company, ownership shared with the American people, it could benefit everyone; the carmakers, their dealers and their customers. A single company could be in a better credit position to borrow needed cash, and - crucially - it would be able to take advantage of the entire $25 billion taxpayer bailout which has already begun to "trickle down" into Detroit Three bank accounts.

What might a merged Detroit Three look like?

GM, Chrysler and Ford employ about 400,000 people in the US, with over 150 plants and more than 14,000 dealerships in North America.

Ford also owns 33% of Mazda and is said to be shopping around for buyers for all or part of their stake. Ford has taken little if any advantage of the great engineering minds at Mazda. For all the good Ford has gotten, they might as well sell.

Ford offers buyers exactly one gas-electric hybrid: Their old, truck-based Escape SUV. Well, two, if you count Mercury's Escape twin, the Mariner hybrid (used by President and Mrs. Clinton, with Secret Service approval).

For more on what America could look like making a fresh start with the Detroit Three merged into "Detroit One," click below ...

Any merger will result in many job losses, and scores of facilities would close. We need to make certain that Washington is ready, willing and able to provide whatever assistance these laid-off workers need. If they can bailout Wall Street, well, you know the rest ...

I'm tending towards the optimistic about everything our world is going through now. As it becomes clear a huge change in Washington is coming, it offers this rare possibility for all of us: Being able to start over, and doing it right this time. (Above, the all-new 2010 Chevrolet Camaro is long, low and thankfully not too lean; Below, Camaro's concept interior).

Given that, there could certainly be established, in the next two or three years, a new American auto industry, streamlined, smart and "world class" in every way, especially in its product quality and development and use of new technologies.

There would be a period, perhaps a year or more, to sort the three companies into one. Cultural differences  would be tough to overcome, but at least all the parties would speak a common language (just one of the problems which doomed the Daimler and Chrysler "merger" from the start).

Imagine the possibilities of Detroit Three automotive brain-power under just one roof. Many European and Asian carmakers receive financial support from their respective governments for research and development projects of all kinds, so this new merged company could offer Washington "one-stop shopping."

With a single carmaker, we taxpayers would know where our money was going, for what, and we will eventually enjoy driving new, snazzy, fun, high-tech and clean American-made cars. And if other carmakers want to borrow some of our new automotive technology (as Nissan does with their Altima hybrid, paying for Toyota-developed tech), then we taxpayers might even see some return on our investment.

Cerberus Capital Management owns 80% of Chrysler, while Daimler still owns about 20%. If GM buys that 20%, and the 80% from Cerberus, all parties could ultimately benefit. I'm certain that someone could figure out a way to bring Ford into this new company. (The good ol' days - Ford's 2003 SVT Mustang is gone, as is most of the SVT operation itself, which made people like John Coletti, a legendary SVT honcho, pretty upset).

Cerberus also owns a 51% stake in GMAC, General Motors' huge finance, insurance and home mortgage business (Cerberus paid $14 billion for it two years ago). Cerberus could also swap GM Chrysler's automotive operations for the remaining 49% of GMAC. Cerberus will also talk with off-shore carmakers for some sort of Chrysler deal.

Cerberus has as much concern for this country and its workers and taxpayers as - well, as AIG, Countrywide and all the rest of those highly-vaunted investment outfits, now mostly DOA. Just look at all the problems caused by their buying Chrysler. Placing the failed-and-fired ex-CEO of Home Depot in the top position at Chrysler was just one mistake, albeit an enormous one. (A 2008 Dodge Challenger outfitted with a police appearance package and more test and evaluation equipment you can shake a stick at, goes through its paces on a Michigan test track).

A single American carmaker would enjoy great support in its home market. Car-buyers know there is no  such thing as a real  "American-made" car or truck, and would gladly overlook where some parts come from and where some of the vehicles are assembled for a car or truck in which they have an ownership - and pride - stake.

But Detroit has to make the first move. They have to apologize for past transgressions (there's a load of them), and convince all of us they are finally willing to make the leaps into the future which they've avoided the past 30 years and more. The public will never again fall for those, "We only made gigantic SUVs because the public demanded them" explanations/excuses.

Whatever this new American car-making industry may look like, product will still be king; if it's not right, then all the help in the world won't save Detroit.

Comments

[abwoodjr]

Two thoughts here: 1) a buy out of one of the tree and, 2) an outright failure.

In the case of Cerberus, which, incidentally, is the three-headed dog who guards the gates of Hades/hell, is itching to get rid of both Chrysler and GMAC. But no one has the cash to buy them--especially GM. Ford is a little better off but Muallaly is too smart for that in these tough times. The one group that no one is talking about that is flush with cash is the Chinese automakers. They are dying to get into the US market and could do it with the finances that they have.

Following the Chrysler bailout in the 80s (?), I don’t think any administration-McCain or Obama--will let one of them die and wither on the vine. Times are tough but the loss of one of the country's few remaining manufacturers will be a political death. I wish I could say with confidence that either administration will be able to turn around the economy. Just don’t think either can do it.

The problems of the economy are not economic, they are about consumer confidence. No government program, bail out, or economic stimulus package can change consumer confidence.