GM-Chrysler merger talks hinge on US Presidential elections

Amongst the millions looking towards the US Presidential elections with interest, surely must include the heads of General Motors and Chrysler. That's because the success of any proposed acquisition of Chrysler by GM will depend considerably on the policies to be framed by the new administration, especially regarding any financial assistance for the deal. The outgoing Bush government has turned down any such help. (See: GM in talks with Chrysler, Ford)

According to sources, GM and Chrysler, pressing for an agreement as a slumping economy and a freeze on auto loans push industry sales toward a 15-year low, don't expect to make significant progress on government aid until after the US election. Combining the companies would require $10 billion to $12 billion in additional cash to mesh operations, analysts say, and in such a scenario government support is essential. Financing the deal is a major concern. (See: GM looks at overseas funds to finance Chrysler acquisition: report)

Moreover, the deal may face considerable opposition from the workers, worried about the consequential loss of jobs that any merger brings with it. United Auto Workers (UAW) President Ron Gettelfinger has said he would not like to see any development that could result in a consolidation which in turn would mean ''the elimination of additional jobs." He said that the UAW is about creating jobs, not losing them. (See: Unions to oppose GM-Chrysler alliance)

Automakers including GM, the biggest in the US, are eligible for $25 billion in low-interest government loans to retool plants, while auto lenders may get funding from the $700 US billion bailout of the banking system. The companies and their supporters want to speed plans to dispense the money and ease rules on its use.

GM CEO Rick Wagoner has personally lobbied for aid to help combine GM with Chrysler.