GM and Chrysler Run Financial Gauntlet: Merger Talks Stall and GM Sales Tank

The merger between Chrysler and General Motors is likely going to be delayed until after the U.S. election. Meanwhile, the feds announced they would not give financial help to the U.S. auto giants to help them merge, and GM sales are plummeting. Digital Journal -- Earlier in October, news of a potential merger between General Motors and Chrysler hit the business world by storm. Critics (including DigitalJournal.com's Paul Wallis) were nothing short of brutally honest about their feelings of the merger. Wallis wrote: "Good luck to GM and Chrysler if they can resuscitate themselves. God won’t be able to help any corporation which persists in the failed strategies which have been disemboweling American industry. The car industry is in roughly the same position as the finance industry in some ways, poisoned by a culture which just didn’t notice the new millennium, or any of the risks it posed to itself with its insularity. " Now, GM asked for a $10 billion loan from the Bush administration and Congress to help keep the company from going, err, spark plugs up. GM reportedly said it would maybe use some of the cash to fund a merger with the big C. According to CNN Money, most experts believe the two do indeed need to merge to survive because it would save them billions in redundant expenses; GM is limping with only $21 billion in cash and Chrysler is running lean on $11 billion (of which most was borrowed). To make matters worse for GM, sales have now run flat. Global sales in the third quarter were down a whopping 11.4 per cent compared to the same time last year. GM sold 2.11 million vehicles during this time, compared with 2.38 million in the same period last year. GM also lost $18.8 billion in the first six months of 2008 and is expected to announce another quarterly loss next week. But the big car makers can't have their cake and eat it too, as there is always a negative side to every business story involving the word "savings." Of course, a merger between Chrysler and GM would mean tens of thousands of job cuts, and in a rough economy that might be regarded as proper management or downright evil. But if the car makers were planning to use federal bailout money to fund a merger, they're going to have to come up with another plan, as the U.S. Treasury Department said it will not negotiate with GM or the owners of Chrysler, Cerberus Capital Management, on their request to provide direct government aid. A Bush administration official told Reuters they would instead look to speed up the process of getting the $25 billion in factory retooling funds Congress approved last month. "Sources familiar with the discussions said Wednesday the two sides agreed on the major issues, but the final form of any deal would depend on government financing and what form it would take," Reuters reports. Without financial aid, and during a busy political season, the merger talks are reportedly on hold until after Nov. 4.