The cash squeeze fears for GM and Ford

[doh]

http://www.cnbc.com/id/25328217/site...t%7C&par=yahoo

With Standard and Poor's putting GM, Ford, and Chrysler (and their respective finance companies) on credit watch with negative implications, the big issue is not just the deteriorating auto market, it's the potential liquidity crisis looming for these firms. Nobody is predicting they will go bankrupt in the near future. In fact, they have plenty of liquidity to get through 2008. No, the real question is what happens If their finances don't improve by the middle of next year.

In short, the Big 3 are now in a race against time. They need to quickly shift gears and come up with more of the models that will sell (cars and crossovers) while pulling back on those that don't (trucks and SUV's) and in the process try to limit losses. In the best of times that's a tricky move. But in a weak economy it's like walking a tight rope.

That is what's scary about the downward spiral the Big 3 find themselves in. Nobody knows when gas prices will drop enough and consumer confidence will pick up enough to give these guys some breathing room. The only thing that seems certain is that June will go down as one of the worst months for auto sales since the early 90's, and monthly truck sales may be their worst in decades.

[ekool]

I sure hope things turn around soon. If any of the big 3 go away all the consumers lose as it is the competition that really drives the innovation and good prices in the market. Without that competition, all that goes away.

[Rick_VT]

Maybe its time GM Ford and Chrysler got together to look at ways of combining some of there purchasing, wether it be small things like inside the car that cant be seen by people like electric window motors and stuff like that, to the 3 of them combining to develop small car platforms together for large savings, or for the larger SUV platforms that are only sold in NA.

Some rather large cost savings could surely be found between the 3, might be time for the 3 of them to stop trying to fight each other and the japanese car companies at once and stood against them together

[jaywestfall]

After watching gas prices skyrocket, I am getting that '70s feeling again, and it is not a good thing. It's pretty obvious (at least for the short term) that consumer demand is moving to more fuel efficient vehicles, and GM looks to be holding the bag, again.

[fan]

I guess it would be good if one of the 3 would be absorbed by the other two. That is Chrysler group could be split between Ford and GM. Each of them would get as much as they can manage from Chrysler (Dodge to Ford and Chrysler to GM or the other way around). Doing this would allow reducing the number of platforms by 1\3 among them while keeping the same market share.

[Rocket 88]

Originally Posted by jaywestfall

After watching gas prices skyrocket, I am getting that '70s feeling again, and it is not a good thing. It's pretty obvious (at least for the short term) that consumer demand is moving to more fuel efficient vehicles, and GM looks to be holding the bag, again.

You'd think with 30 years warning GM coulda been prepared. But who knew gas would ever cost more then bottled water or MilK?>?

[hotrod1949]

Originally Posted by Rocket 88

You'd think with 30 years warning GM coulda been prepared. But who knew gas would ever cost more then bottled water or MilK?>?

The problem is North Americans always looked to small cars with small prices, premium small cars were generally avoided by the masses. While Toyohonissan were developing platforms for the world,GMNA focused on NA, where people were buying trucks and RWD V8 cars. Ford is guilty of the same thing, and anytime they have tried to sell a Euro small car (Fiesta for one) in the NA marketplace, it has failed. GM (and Ford) have hopefully got a handle on the global thing now, and will only make minor adjustments for local tastes.

[delmarjohn]

My question is if GM sales around the globe are good ,then why is it we are importing holden for the G* but all those cars that seem so appealing to latin america and and those badge by daewoo are not being sent here to offer the person an alternative to the big trucks ...if the competition can redirect their prtfolio then WHY does GM import the G8 ,and not some the more fuel efficient cars ..oh by the way my opinion on the G* is nice car,but styling is a GENERATION behind

[windvale]

Originally Posted by fan

I guess it would be good if one of the 3 would be absorbed by the other two. That is Chrysler group could be split between Ford and GM. Each of them would get as much as they can manage from Chrysler (Dodge to Ford and Chrysler to GM or the other way around). Doing this would allow reducing the number of platforms by 1\3 among them while keeping the same market share.

GM merging with Chrysler is like the two ugliest kids in the class getting married and thinking their going to have beautiful babies...

BTW...how does "keeping the same market share" help ? Profits are the life blood of any business. Market share is a metric to help you understand what's going on with your business relative to the competition - but market share is kinda meaningless in and of itself.

[Extreme4x4]

Emissions and crash safety.

[jcgable]

I'm growing increasingly un-optimistic with GM's future. I know the demand for trucks crashed far more rapidly than anyone anticipated, but people pretty much could see this happening 3 years ago. Gm execs were evn talking about it, and didn't do much.

[mschwope]

So if one of them were to go bankrupt, what then happens to all the pensions and what not? Does who ever assumes the company take all that stuff with it to?

[kenman923]

I am wondering if GM or Ford will receive loan guarantees like Chrysler had in the 80s.

[iamwin]

GM's bonds are now yielding a fat 13%. It is awfully tempting...

[ChevroletRevived]

Originally Posted by Rocket 88

You'd think with 30 years warning GM coulda been prepared. But who knew gas would ever cost more then bottled water or MilK?>?

Yeah, isn't that crazy? Gas being more then milk. Ridiculous!