The last few days have been rife with rumors that General Motors will buy the Chrysler Group from DCX. Most people commenting on this potential deal wonder why GM would want Chrysler. Their product lines overlap, GM has enough work on its hands streamlining the organization it already has, and Chrysler has few winning products at the moment.

But what might the merger mean for Chrysler? It dawned on me this morning that their are many parallels between Chrysler today and AMC 20 years ago, when Chrysler bought it from Renault:

–subsidiary of a European company

–financial losses

–most car models not selling well

–large sedan styled for American tastes, but based on European platform (thanks, Stephane)

–too small to stand on its own

–Jeep the strongest part of the company

–Bob Lutz second-in-command at the acquirer

After Chrysler bought AMC, it initially made a go of selling the company’s cars, under a new Eagle brand. But eventually they went away, and the brand was discontinued a decade after the acquisition. All that remained of AMC was Jeep.

Granted, Chrysler’s large sedans, pickups, and minivans are stronger than AMC’s cars were. But the sedans have been losing momentum, and GM has its own large rear-wheel-drive sedans on the way. Clearly they would not continue to develop two large platforms for this segment. Any bets on which platform will die, GM’s homegrown one or Mercedes’ hand-me-down? The situation is the same for the large pickups, where the general consensus in the press is that GM has a newer, much better platform.

This would leave the minivans. GM is discontinuing its own minivans, so in this area the acquisition would actually make sense.

Jeep, on the other hand, is much weaker than it was in 1987. In 1987, the SUV market was just beginning to grow. In 2007, it’s just beginning to shrink. In 1987, Jeep had the compact four-door SUV segment pretty much to itself. In 2007, this is a very crowded segment. So, while GM could use a more up-to-date midsize conventional SUV platform, the segment isn’t nearly as promising as in the past.

Beyond the products, there’s the organization. When Chrysler bought AMC, it also acquired a talented, tightly-integrated team of executives and a superior way to develop new products. If GM had bought Chrysler a decade ago instead of Daimler-Benz, the situation would have been similar. Back in 1997 Chrysler was led by a very talented team of people, and its product development process was significantly quicker and cheaper than GM’s. But in 2007 the talent of Chrysler’s executive team is questionable, and GM’s much improved product development process is turning out much better products at least as quickly and cheaply. After Chrysler bought AMC, many people from AMC ended up leading the combined organization, such that old Chrysler insiders began to wonder who had bought whom. I don’t see this happening if GM acquired Chrysler.

So, in some respects Chrysler might fare better than AMC after being acquired, but in other respects it would likely fare worse. The Jeeps and the minivans would likely survive; the car platforms would go away. There seems little reason to maintain the Chysler and Dodge brands, except that it would probably cost too much to buy out two large groups of dealers. So they’d become badge-engineered GM products–not at all what GM needs. And the Chrysler organization? With little to teach GM at this point, and with few products of its own to develop, much of it would also disappear.