GM And Ford To Merge? Don't Hold Your Breath For That One

GM logo, General Motors logo
GM logo, General Motors logo

GM and Ford under one roof. It's an intriguing idea, and one that people are throwing around.

The latest being BusinessWeek, which is reporting GM execs have talked about the idea of GM and Ford merging, but decided not to pursue because it would be a distraction to GM's turnaround.

While the report characterized the talk as "internal banter", the idea of GM buying Fordis out there, and people are asking, would this move make sense?

Let me be clear about what a mis-guided and bad idea this would be. As a friend of mine said when I brought this up, "Two wrongs do not make a right." Right now, these guys are going in the wrong direction for similar reasons and there's little reason to believe a marriage would make things right. Why? Here are a few reasons.

Too many under-utilized truck and SUV plants in North America. These guys are already struggling to cut/convert these plants to build more cars and fuel efficient crossovers. Imagine trying to do that on an even larger scale.

Ford
Ford

Duplicate product line-ups. From sedans to SUVs to pick-ups, these guys mirror each other. GM already has too many brands in my opinion. Adding Ford, Lincoln, Mercury and Volvo would make matters worse. Then there's the inclusion of thousands of Ford dealers. GM needs way fewer dealers and brands, not more.

Ford brings little to GM's international growth. They are strong in the same markets: Europe, Latin America, and Australia. And while Ford is a little further along than GM in the high growth markets of India and Russia, it's not like Ford would bring a treasure trove of potential profits to GM on the international side.

Too much debt. Ford's already way in hock and GM is headed that way as it burns through cash and tries to re-tool it's plants. Put these two together and you have even more debt that would weigh down A joint company.

Sure it's tantalizing to think that GM and Ford together would have roughly 33-35% market share in the U.S. And would easily be #1 in the world, well ahead of Toyota. Plus there are so many iconic brand names between the two companies, Rick Wagoner would oversee a portfolio of the most brands with the most brand awareness around the world.

But the reality is that these guy are better off apart. Rick Wagoner knows that. Alan Mulally at Ford knows that. Now it's time all of us know that as well.

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