GM and Ford in merger talks, says Automotive News

18 September 2006

US auto majors General Motors and Ford have discussed a partnership and possible merger, according to influential US-based industry publication Automotive News. The report published today quoted unnamed sources familiar with the talks.

However, the report adds that the two companies are not holding any talks at present and that it is not at all clear whether the negotiations will lead anywhere. One of the sources for the story said there is only a slim chance that anything will come out of the discussions.

If an alliance or merger between the two companies happens, it would shake up the global auto industry. Such an alliance would be the global industry leader, with a wide margin over second-placed Toyota Motor.

Such an alliance would also ring the curtains on discussions for a three-way alliance between GM, Nissan Motor of Japan and French auto manufacturer Renault. These discussions were initiated in July this year and any progress in these talks is not known.

Both GM and Ford have been facing a steady erosion of market shares in the key US market for many years now. Both companies have been reporting losses for the last few years and are financially weak. Their model line ups are outdated and both companies have considerable legacy costs in the form of worker's benefits.

Ford has recently announced a substantial restructuring of its business and is planning to close down many plants and lay off tens of thousands of workers over the next few years. The company has recently appointed Alan Mullaly, former head of commercial aircraft division at Boeing, as its CEO.