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It will never happen but an article at Breakingviews says that the only way to save the American auto industry is to merge Ford and GM. His main arguments are based upon the fact that a GM-Ford merger would create a giant that could actually fix the two companies problems rather than having to work separately and have interested parties play one against the other.

The Big One - as a GM-Ford combination might be dubbed - would be in a much stronger position to tackle legacy costs in bargaining with unions, suppliers, healthcare providers, dealers and the government than they presently are today as fierce rivals.

The savings would be tremendous - far larger than anything Nissan-Renault presents. If a merged GM-Ford reduced costs equal to 2% of sales - one common M&A benchmark - the capitalised value of the savings could be some $40bn - well above their $30bn of combined market cap today.

I have a hard time believing the savings alone is more than market caps of both companies combined, even if their stocks are depressed under the weight of their immense problems.

The article goes on to suggest the issues that would obviously arise, such as the number of brands that a combined entity to have (24) and the issues with dealers and unions.

Personally, I love the idea of a Renault-Nissan-GM alliance from a purely selfish standpoint. One of the ideas bandied about is that GM kills a brand (Pontiac or Buick, most likely) and pays off the dealers by making them Renault dealerships. I would love to be able to import some of the fuel efficient diesels that Renault produces (of course GM produces them overseas too, but is too stubborn to bring them here). If they do make Renault dealerships, it wouldn’t make any sense to only bring over the gas models.

I really think, though, it’s much ado about nothing. Rick Waggoner has to do the meeting with Carlos Ghosn to show he’s doing something. The number of roadblocks that GM will through up will never be able to be met. The crisis at GM isn’t at a high enough state in order to bring about fundamental changes that need to be made. Someday we won’t recognize GM, but that day isn’t anytime in the near future.