GM- Chrysler deal hits a wall
 

General Motors has failed to motivate the government in incentivizing it’s takeover of Chrysler LLC owned by Cerberus Capital. The U.S. Treasury is not interested in funding the deal, which GM needs badly in order to survive and come up with the much needed funds to complete the takeover.

According to the White House, automakers should tap into the $25 billion allocated to the re-tooling of production lines, which has been available to them for quite some time. The $25 billion is to be used exclusively in order to make automotive production more fuel efficient. The U.S. Treasury does not want to begin a trend of bailing out businesses as it has been receiving bad press over it’s bailout of the financial industry.

General Motors in recent months has been losing $1 billion a month amidst a decline of sales. Future developments have been put on hold including the Suburban/Tahoe, Corvette, Malibu and Chevrolet Cruze models.

GMAC, the financial arm of General Motors is in the process of trying to change it’s commercial classification to become a bank in order to take advantage of the $250 billion bailout package, which has been allocated to the banking industry. Seems that is the only change GM has of taking over Chrysler in its entirety at this time and saving itself.

According to previous discussions even if GM does take over Chrysler, all but 7 models of Chrysler will be cancelled and about 50% of it’s current production plants will be shut down. Maybe it is best for Chrysler employees and the economy if this deal does not take place after all.



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