A GM-Chrysler merger would have drastic affects on the smaller company's factories, brands dealers and suppliers, according to a US management consultancy.

"Chrysler as we know it will cease to exist very soon," said Kimberly Rodriguez, principal of Grant Thornton's automotive practice. "At this point, there are very few options available to either company. We believe a transaction between GM and Chrysler is likely because it would be the most expedient way to protect cash and jobs at both companies. If one or the other company were to fail, we would face a much bigger calamity - the collapse of the North American supply base and the potential endangerment of all three Detroit automakers and businesses that depend on them."

A report by the consultancy said that under a GM/Chrysler transaction, Cerberus Capital Management would likely receive half of GMAC, GM's financing arm, and keep a percentage of the merged manufacturing entity.

"There is a strong possibility that the federal government and current company stakeholders will participate in a transaction, with the goal of completing a deal before the presidential election," the report said, though sources have since said that the Bush administration has ruled out help.

Grant Thornton's automotive advisory experts have seuggested several possible outcomes of a GM/Chrysler transaction.

Of Chrysler's 26 model offerings, only seven are core and likely to be retained (56% of sales).  These include the Dodge Ram pickup truck, core Jeep-brand vehicles and the company's minivans.

Half of Chrysler's 14 existing manufacturing facilities likely would close. Three already have been announced for closure. A plant reduction of this magnitude would equate to about 12,000 production jobs lost plus another 12,000 administrative positions.  Of this amount, a reduction in force of 5,000 has already been announced.

Hundreds of supplier companies would be impacted, which could result in the loss of an additional 50,000 jobs.

Dealer consolidation efforts would intensify.  Chrysler and GM combined have 22,000 franchises - half of the total in the United States.  However, the combined market share of the merged companies would only be about one-third of today's significantly smaller market for new vehicles.

"Despite the significant number of families that will be impacted, the benefits of combining the two companies are both structural and strategic," Rodriguez said.

"From an economic and political standpoint, the new company will likely be viewed as 'too big to fail.'"

Grant Thornton said GM is strong in international markets, is increasingly using global vehicle architectures for scale and efficiency and is a leader in plug-in hybrid technology with the Chevrolet Volt. To this product mix, Chrysler brings seven key models that have been recently redesigned or will be by 2010.

The new company would be a much more powerful force in the full-size pickup truck segment, displacing Ford as the truck leader.

The combined company would have more liquid assets, thanks to the cash on Chrysler's balance sheet.

Significant cost-reduction opportunities would be possible, especially in sales, marketing and administrative functions.  Overlapping assets could be sold.

"On the whole, the combination of GM and Chrysler would certainly create yet another wild ride on the auto industry roller coaster, where cash and platform position determine the winners and losers," Rodriguez added.