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GM, Chrysler, Ford: What Is It They Really Want?

After a few days of tracking the latest talks between GM and Chrysler, I'm more convinced than ever before that these two companies will not merge. It's an idea that ultimately creates more headaches than solutions for GM. So, if these two automaker's won't hook up, what do they want?

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General Motors Headquarters

• GM
Chairman and CEO Rick Wagoner wants cash and financial flexibility. While the automaker has enough liquidity to get through the rest of this year, and well into next year, it needs more to guarantee it can ride out what could be an extended slump in auto sales lasting through 2010. Don't be surprised if GMraises that money by selling the remaining 49% of GMAC that it owns.

• Cerberus Capital
From my perspective the owners of Chrysler want to get out of the auto making business while getting stronger in auto financing. This is why I believe the most likely deal is for Cerberus to buy out GM's half of GMAC so Cerberus would own all of GMAC. Combining GMAC with Chrysler Financial would create a potentially powerful auto finance company.

• Chrysler
Chrysler is the odd man out. While CEO Bob Nardelli says publicly Cerberus Capital is committed to keeping and growing the automaker, this is not the impression I get. Since I don't think it will be able to swing a deal with GM, I would not be surprised to see Chrysler wind up in the hands of Nissan/Renault, which is looking for a stronger footprint in North America. Also, Jeep is the diamond in Chrysler's business. Nissan/Renault would love to leverage that brand around the world.

• Ford
CEO Alan Mulally is sticking to his game plan for reviving the automaker. The company would love a little more cash on hand, and can get it by selling it's stake in Mazda or Volvo, But Mulally is not a guy to do deal for a price lower than what he should be getting in good times. That's why I expect Ford to sit tight.

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