THE CHRYSLER Corporation's struggles to find a partner for a merger is not merely the desperate reaction of one company in trouble. In retrospect, it is likely to be seen as an early stage of a great worldwide consolidation of the automobile industry. There are probably no more than six or seven companies with resources sufficiently deep, and distribution networks sufficiently broad, to keep them competitive in their present corporate forms. The rest are all looking anxiously for alliances and mergers, of one degree or another, to enable the to survive.
Chrysler had one great asset to offer the Ford Motor Company -- the K-car, a smart new model with front-wheel drive fitting into a part of the market in which Ford has nothing to offer and no very early propects. But against the K-car the Ford directors had to weigh everything else that Chrysler would bring with it. There is the entanglement with the U.S. Treasury, which, because of the government-guaranteed loans, has become deeply involved in the management of Chrysler's affairs. There is the long list of Crysler's obsolescent plants and the endless grief that major plant closings entail. There is the Chrysler board of directors, which now includes Douglas Fraser, the president of the United Auto Workers. There is the UAW itself, which has let Chrysler's wages slide below those of the other American automobile companies only as the price of keeping the company alive. If Chrysler were suddenly joined with a stronger partner, the union would immediately demand a return to full parity. Ford though about the invitation, but not very long, and said no.
Two years ago, a likelier possibility would have been a merger with Peugeot, the French auto maker. Peugeot had bought Chrysler's European operations, and it appeared to be interested in establishing itself in the American market just as its larger competitor, Renault, was doing by buying into American Motors. But Peugot has had difficulty digesting the former Chrysler susidaries, just as Renault has discovered its venture with AMC to be a much more expensive proposition than it had anticipated.
Another potential partner might be Mitsubishi Motors, in which Chrysler already owns a 15 percent interest. But Mitsubishi isn't showing much an inclination toward a wider alliance. Perhaps some of Chrysler's competitors assume that the event of a bankruptcy, Chrysler's operations would go up for sale separately without the enormous financial and contractual encumbrances now attached to them.
But before that happened, Chrysler would certainly go to the Reagan administration and to Congress for further federal aid. The melancholy fact is that Chrysler had already found a partner, and it is the Treasury. The Reagan administration believes that the government ought not to get into the automobile business. That's quite right, in principle. But in practice, the real question will be whether the government can get out of the automobile business.