With General Motors (NYSE: GM), Ford (NYSE: F), Chrysler and the rest of the Detroit auto industry looking likely to get a big chunk of the $25 billion in taxpayer-funded loans they need to remain viable, there's another group that needs more credit for the industry to turn itself around: consumers.
Light-vehicles sales are expected to have fallen 26% year-over-year for September and Goldman Sachs auto analyst Patrick Archambault told clients in a note that "Decreased credit availability [is] constraining sales even at prime levels of credit quality."
The industry will get the loans it needs to build new cars, but unless consumers can get the loans they need to buy them, the big three are still in trouble. Add that to historically high gas prices and a generally weak economy and it's hard to see any reason for near-term optimism for the industry. Longer-term, of course, lower-cost overseas producers of better cars will continue to eat Detroit's lunch.
I'll make a not so bold prediction: with liabilities far exceeding its assets and an inability to turn a profit, General Motors will be bankrupt, merged, or otherwise irrelevant within the next five years.
Auto industry faces body blow from tight credit markets
Posted Sep 29th 2008 11:11AM by Zac Bissonnette
Filed under: Deals, Ford Motor (F), General Motors (GM), Recession, Financial Crisis
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Reader Comments (Page 1 of 1)
9-29-2008 @ 3:09PM
nick said...
you think any one is gonna take your words as gospel just because you write a post on the internet? You sir are not a fortune teller so therefore ill take it with a grain of salt. I happen to think that G.M. can ride this thing out and profit again because they are making better quality and fuel efficient vehicles. They have to in order to be #1 again