SOUTHFIELD, MI – Financial consultant Grant Thornton LLP estimates job losses between 100,000 and 200,000 and predicts a potential shutdown of the entire auto industry should General Motors Corp. not absorb Chrysler LLC and one of the companies spins into a free-fall bankruptcy.

However, the firm expects GM and Chrysler parent Cerberus Capital Management LP to secure an estimated $10 billion in outside funding to broker a deal in principle before Tuesday’s national election.

“A decision, in terms of moving forward, where there has been some ability and belief for stakeholders, whether they be the government or existing entities, to pull cash together is reasonable,” Kimberly Davis Rodriguez, principal-Corporate Advisory and Restructuring Services, Grant Thornton. “There’s a really good reason to get it done by Tuesday.”

In short, Rodriguez says, the deal requires some level of government assistance, which will not occur during the lame-duck period between administrations. “Nothing gets done then,” she says.

Moreover, GM and Chrysler need the opportunity the industry’s annual holiday shutdown period would provide for capacity adjustments.

A source in Washington tells Ward’s today a sense of immediacy exists, but the gusto to rush to the industry’s aid has faded slightly.

“I don’t feel that same sense of urgency today,” the source says, while expressing pessimism over a financing package before the weekend.

Structurally and strategically, Grant Thornton takes a positive view of the combination, Rodriguez says.

Benefits outlined in the summary of a larger presentation the firm compiled for its clients include GM’s strong presence in international markets and the auto maker’s shift to leverage global architectures for scale and efficiency. In addition, the upcoming Chevrolet Volt extended-range electric vehicle gives GM leadership in the plug-in vehicle segment. Added to that mix, Chrysler would bring seven products recently redesigned, or slated for redesign by 2010.

The firm also expects a combination of the Chevrolet Silverado, GMC Sierra and the new-for-’09 Dodge Ram to solidify GM’s domination of Ford Motor Co.’s F-Series in the all-important light-duty pickup segment.

Chrysler’s estimated $11 billion in cash would provide the combination with more liquidity and cost reductions exist, especially on the sales marketing and administrative side. Overlapping assets could be sold, the firm says.

“Certainly there remains risk with a combined venture. It would be difficult to argue that this is an optimal solution,” Rodriguez says. “In the current environment, it is a possible solution. It takes a merger of the two, because it has been difficult for either entity by itself to make the kinds of changes it needs to be a long-term player in the industry.”

Grant Thornton also offers perspective on how deeply a bankruptcy at Chrysler, which it considers unlikely, may affect the industry. Rodriguez estimates job losses of between 100,000 and 200,000 if the Auburn Hills, MI, auto maker files Chapter 11 and cannot continue to build vehicles, pay its suppliers, leases and employees.

“You would have a shutdown of the auto industry,” she says. “If Chrysler simply goes into bankruptcy and stops paying suppliers, those suppliers supply Ford and GM and Toyota and Nissan as well, and suppliers cannot take a complete cutoff from Chrysler.

“Since the domestics share the same suppliers, the likelihood is (other auto makers) would need to restructure, as well,” she says.

Rodriguez would expect an out-of-court bankruptcy before Chrysler spun into a freefall bankruptcy.