GM-CHRYSLER MERGER TALKS

WASHINGTON (Reuters) – The U.S. government is considering direct financial assistance to facilitate a possible merger between General Motors Corp (GM.N) and Chrysler LLC, a private sector source familiar with Treasury discussions told Reuters on Monday.

The Treasury Department is weighing aid of at least $5 billion, which could include capital injections and government purchases of bad auto loans, according to the source, a financial policy executive who spoke anonymously because the discussions are private.

Emergency financing, at least initially, most likely would be focused on GM and Chrysler and not Ford Motor Co (F.N), which is struggling but still better off financially than its U.S. rivals, the source said.

A Treasury decision could come this week, the source said.

READ MORE http://news.yahoo.com/s/nm/20081027/bs_nm/us_financial_gm

UPDATE OCT/31/08

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National Agreement Contract Secures Record Level of Benefit Contributions 

October 24, 2008

(Washington, D.C.) – Facing the worst slump in the automotive industry in decades, Teamster carhaulers have ratified a new national agreement that secures a record level of employer contributions for health, welfare and pension benefits. The agreement was overwhelmingly ratified by a 75 to 25 percent margin. (Review preliminary vote results.

Read More http://www.teamster.org/NMATAratified.aspx

Mounting problems fueling possible deal with Chrysler, analysts say.

The Detroit News http://www.detnews.com

General Motors Corp.’s move to force out white-collar employees for the first time in about 20 years and cut benefits underscores the deepening problems facing the automaker. The escalating challenges are driving a possible acquisition of rival Chrysler LLC, analysts said.

GM’s cost-cutting moves coincided with fresh signs of the devastating impact of the global financial crisis and the worst auto sales market in 15 years on Detroit’s Big Three automakers.

On Thursday, Chrysler said it plans to cut 1,825 more factory jobs and accelerate the closure of a sport utility vehicle plant in Delaware. News of the cuts came as Daimler AG said it had reduced the book value of its almost 20 percent holding in the Auburn Hills company to zero — a stark sign of the U.S. automaker’s deteriorating fortunes.

Automotive News
General Motors, Ford Motor Co. and Chrysler LLC may drag U.S. auto sales for October to their lowest levels since 1992, a forecasting firm said.

http://www.autonews.com/article/20081023/ANA05/810230278/1078&refsect=

Ghosn’s proposal: Chrysler would be partner with Renault-Nissan

The Detroit News

The Renault-Nissan alliance is proposing to acquire around 20 percent of Chrysler LLC and bring the Auburn Hills automaker into the French-Japanese automotive partnership, according to sources familiar with the situation.

The offer is now before private equity firm Cerberus Capital Management LP, which also is in talks with General Motors Corp. about its Chrysler holding.

http://www.detnews.com/apps/pbcs.dll/article?AID=/20081022/AUTO01/810220384/1148

But another source close to the talks has told The Detroit News that Cerberus founder and CEO Stephen Feinberg favors a deal with GM, viewing it as the best solution for the embattled U.S. auto industry.

DETROIT — Negotiators hope to finalize a merger agreement between General Motors (GM) and Chrysler before the presidential election and are lobbying for government financial assistance to help clinch the deal, says a source who has been briefed on the talks.

http://www.usatoday.com/money/autos/2008-10-19-gm-chrysler_N.htm?loc=interstitialskip

So, What’s this new company going to be Called?  Who is going to haul it?   Is this new business?

UPDATE: Banks join GM-Chrysler talks

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AUTOMOTIVE NEWS
12:01 am U.S. ET | Oct. 20

Call it a miracle, but despite the industry’s biggest sales collapse since 1980, automakers have prevented inventories from spiraling out of control. The sales plunge and a huge swing in the model mix could have sent stockpiles soaring….  http://www.autonews.com/article/20081020/ANA03/810200336/1197

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Well there is some good news

 at plants in Michigan and Delaware

David Shepardson / Detroit News Washington Bureau

General Motors Corp. will lay off about 1,600 hourly workers at three assembly plants, citing the reduced demand for many products, the automaker announced today.

The company notified the United Auto Workers on Sept. 29 that it would lay off 700 workers at its Pontiac Assembly plant, about 400 hourly workers at both its Wilmington, Del., Assembly plant and its Detroit-Hamtramck Assembly plant, GM spokesman Tony Sapienza said.

http://www.detnews.com/apps/pbcs.dll/article?AID=/20081016/AUTO01/810160454/1148

Already anemic vehicle sales further depressed by stigma from companies’ struggles for survival.

Bryce G. Hoffman / The Detroit News

Falling stock prices and increasing talk of bankruptcy are beginning to frighten car buyers away from Detroit’s troubled automakers.

As if high gasoline prices and tight credit were not enough, General Motors Corp. and Ford Motor Co. now have to contend with the damage from a steady stream of negative news stories, merger speculation and common shares that trade for less than the price of a double latte.

Marketing experts say the bad financial news is eroding already weak sales — proving why bankruptcy is such a dangerous option.

READ MORE http://www.detnews.com/apps/pbcs.dll/article?AID=/20081016/AUTO01/810160375/1148