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GM-Chrysler tie up may be a boon for Canadian auto industry: analyst

Posted: October 27, 2008

If the current tie-up talks between General Motors Corp. and Chrysler LLC fail it would almost certainly prove catastrophic for the Detroit Three, and the North American auto industry a whole. But if a merger does occur, the resulting synergies may provide a boost to the industry here in Canada, according to a new report issued by Pennsylvania-based AutomotiveCompass LLC.

An agreement between GM and Chrysler would lead to the elimination of any redundancies in their product lines, the report states. “In this situation, the [Chrysler] products GM would prefer to retain – the profitable products – the minivan and the LX are well suited,” said William Pochiluk, author of the report. “In any scenario, GM’s powertrain group is going to do better.”

Chrysler builds it Town and Country minivans and Dodge Caravans at its assembly plant in Windsor, Ont., and its Chrysler LX platform cars – the 300 and the Dodge Charger - in Brampton, Ont.

GM powertrains would also likely replace Chrysler’s in the event of a merger, which would give a boost to the output of its engine plants in St. Catharines, Ont.

However, a deal is far from certain and if the two fail to reach an agreement, Mr. Pochiluk said it is “very likely” that Chrysler would be forced to declare bankruptcy in the near future.

GM may also be forced to follow suit. Such a scenario would be a “disaster” that may envelope Ford as well, and if all three were to crumble it would it would mean up to 2 million households across America could be impacted by the ensuing labour cuts, Mr. Pochiluk said.

“As a stand alone company, [Chrysler] is doomed,” he said. “This may also be the case as well for General Motors. We believe the U.S. Government needs to come to table.”

LINK: GM-Chrysler tie up may be a boon for Canadian auto industry: analyst - FP Posted
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