The Benefits of a Merger Between Honda And Chrysler

A merger is a mutual decision between two companies to consolidate their resources in the quest to form a single entity. When companies merge, they reduce their overall production costs since by reducing the amount of rented space. In addition, such companies can take advantage of each other’s strengths and skills, enabling them to survive during the hard economic times. In most cases, the companies merge when their sales fall significantly. One of the best ways to maximize production after the merger is to develop a new brand that represents the images of both companies. Since the automobile sector is experiencing an economic crunch, Honda and Chrysler are considering a merger that will shape their destiny.

Honda and Chrysler Merger Talks

Currently, the merger talks between Honda and Chrysler are progressing. Since these companies are relatively equal in size, creating a merger on an equal partnership basis is quite easy. A merger between a large firm and a small company is always difficult to craft since the small company must cede its ground to the large firm. In such a scenario, what begins as a partnership might end up being a legal battle to resolve the turf wars.

Different Roles

Some analysts believe that the shareholders might embark on different roles. While Chrysler would become the main automaker, Honda might specialize on marketing or vice versa. The argument is that by injecting the efficiency of the Japan’s automaker to the Chryslers class and comfort, the companies could introduce a brand that might take the automobile industry by storm. Considering that both companies have the financial capital to survive through the hard times, the goal is to develop a consensus as soon as possible.

Guaranteeing the growth

As the talks develop, both companies are looking to retain their employees. While the previous mergers in this industry have led to the downsizing of the companies and laying off the workers, Honda and Chrysler are hoping to grow by tapping into the available resources. Since both companies have formidable human resources, they are looking to retain as many employees as possible during and after the transition period. The merger is a step in the right direction since it means that these companies will no longer compete. Since this merger will reduce the operational expenses of these companies, it will also help them to reduce their prices. When such companies merge, they can succeed in this industry since they will offer some superior cars at an affordable cost. The best way to guarantee the growth from the onset is to develop some cost-effective models that will suit an array of applications. Honda has the potential to produce some lightweight vehicles that guarantee immense fuel economy and cost-effectiveness. Chrysler adds some elegance as well as the key safety features that the modern car buyer wants. As such, both automakers are bringing key expertise to the negotiating table.

Reduced expenses

Due to the large amount of space that companies require at the factories, a merger will help these automakers to reduce their expenses. Besides the office and factory space, each company has to invest in modern equipment to survive in the modern times. For example, the modern painting equipment costs a fortune. The merged company will share the equipment and save a lot of money in the process. Both companies want this alliance to succeed in the quest to reduce the wastage of resources.