In its November-December Residual Value Report, AutomotiveLease Guide (ALG) offers these predictions regarding a prospective merger orchapter 11 restructuring scheme involving Chrysler, Ford or GM:
"A prospective merger or chapter 11restructuring scheme could shave off 5 percent - 10 percent of current industrysales (~1 – 1.5 million units). Assuming new sales are reduced and Detroit’sdomestic market share drops below 40 percent as a result of a possible merger(i.e. Chrysler with GM) or chapter 11 restructuring plan (i.e. GM , Chrysler orFord), the following are the anticipated impacts:
ALG believes that lower sales could improvedomestic 36m resale performance by ~3-4 ppts after the economy recovers andgiven that sound marketing strategies are pursued. This assumes that lostmarket share is not picked up by the remaining domestic OEM’s through higherincentives and fleet sales. More demand-driven production could spur a positiverealignment of the Big 3’s declining brand value.
With the strong likelihood that brand(s) orvehicles will disappear from the domestic line-up, owners will face anaccelerated loss in resale performance as experienced with Oldsmobile whilecontemplating to defect to import brands. In addition, an unwanted backlashfrom dealers and the UAW could happen, if the merger or restructuring plan doesnot properly address the needs of the dealers and union.
The regional and U.S. economy is likely to sufferfurther given that sales would drop even more. If the merger or restructuringplan generates the much needed cost cutting, demand-driven production andline-up, then additional jobs are at risk with more economic headaches for analready embattled Michigan State. On the other hand,more focus on developing fuel efficient vehicles could provide an upswing tothe auto market as a possible outcome of the restructuring of the domesticOEMs."