Should Ford And GM Just Merge?

News of Ford and General Motors discussions concerning engine collaboration as a way to cut R&D costs has some wondering what the limits of partnership might be. Could a tie-up on engines lay the groundwork for a great partnership? Most importantly: Should they go further — should they merge?

The history of American auto companies in the 20th century is a history of conglomeration. When Nash and Hudson merged to form American Motors it was the biggest such corporate merger in American history up to that point. Of course, the company nearly went into insolvency before making a deal with Renault and eventually being absorbed into Chrysler. A Ford-GM merger would certainly be the largest industrial merger ever to take place, but would there be advantages there? Better yet, would the advantages achieved in economies of scale outweigh the tough issues they'd need to overcome to make it happen? Can they do it on their own? What would the brand lineup look like? Jeez, it could be a mess — help us out here — should Ford and GM merge?

[Photo: UMBC]