Can GM and Ford survive? - Top Stocks Blog - MSN Money
 
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Can GM and Ford survive?

Posted Oct 09 2008, 03:55 PM by Kim Peterson
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The economic crisis is taking a staggering and tragic toll on American carmakers. General Motors saw its shares drop to a 58-year-low today, tumbling 31% to $4.76. Ford's stock price fell 22% to a miserable $2.08.

The drop came after forecaster J.D. Power cut its predictions for U.S. car sales for this year and next. People are holding on to their old cars for longer now and putting off buying replacement vehicles, the forecaster said. Adding to the gloom: Standard & Poor's is considering cutting GM's ratings.

The long-term impact on the industry will be huge. Some car dealers have already filed for bankruptcy, seeing as the tumbleweeds blowing through their locations aren't buying anything. And other dealerships are likely to follow.

Carmakers are burning through cash, and may have to make drastic cuts to their workforce. GM is now pleading for a $250 million loan from a city pension fund in Detroit. Employee morale is in the tank, said Gerald Meyers, the former CEO of American Motors.

"The effect on employees and dealers is severe," he told The Detroit News. "It's like finding out that you have a terminal disease. You try to do something about it, but you know and everyone around you knows that you are in deep trouble."

The crisis is affecting Detroit's upper echelons as well. The Ford family fortune has been mostly destroyed. Nine years ago, the family's special Class B shares were worth $2.25 billion. Now, they're worth less than $189 million, The Detroit News reports.

And that was before Ford stock took an 18% dive today to close at a miserable $2.17. The share price hasn't been that low in decades. Ford's market cap has fallen to $4.9 billion.

Now, some experts are wondering if these carmakers can make it. "It's going to be a tough fight," one industry analyst said.

Related reading:

Auto sales crash and burn

Car dealerships the new endangered species?

Ford shareholders want out

Is a major down cycle upon us?

Comments

 

we need fair trade not free trade

    americans are fully to blame we buy cheap goods from china and dont buy american cars. Then all the good jobs leave our country and we try to blame the goverment. People should be proud to buy goods made here, It used to be that way and our economy was far stronger because of it. ps I will only buy american cars and I have been that way my entire life.  

wife drives a hyundai, I a 1999 Chevy k1500 with 200,000 miles on it.   Truck still gets the job done and when it is finished it won't be the motor which let it down.  Problem is  they don't make that motor anymore(5.7).   Newer 5.3's don't and won't run as long or as good.  Mine still gets 19-20 mpg on the highway at 72 mph.  They make great trucks ;management sucks.  Hyundai not bad but don't know how long it will last

Let's be honest for a minute, Americans have been brainwashed to believe that all American cars are junk. THE BIG PROBLEM is that people are holding on to the belief that American cars are still the underpowered high failure cars that were the result of the gas embargo in the 70's.

Cars built today will outlast the consumer, if they didn't GM wouldn't offer 100k powertrain warrenties and Chrysler the "unlimited power train" Truth be told if you maintain your car like the book says you wont have any real issues. In the last 15 years I have owned 3 domestic cars, a 90 Cavalier (college car 225,000 when I gave the car away) 98 Bonneville 295K (still runs great) and a 01 Intrigue with 155k (my daily driver)

I understand that any car can be a lemon and Domestic Automakers Dealer Networks often wont work with you, but truth be told the American Automakers still provide jobs for people far beyond themselves.

We are in this Crisis because we don't produce anything anymore, we've gotten pretty good at selling debt and pushing paper and asking how can I help you, but our fundimental backbone that gave us the prosperity after WWII was American Industry. We MUST GET THIS BACK!

If you think life is bad now, wait until CHINA, KOREA, and The Middle Eastern countries that own our debt call us to pay it back.

BUY AMERICAN MY CHILDREN and GRAND CHILDREN DEPEND ON IT AS DO YOURS!

DEMAND MADE IN THE USA!

PEOPLE WILL LAUGH FOR A WHILE, BUT THEY WILL LISTEN, IF ENOUGH OF US DO WE WILL CHANGE THIS ECONOMY AND ALLOW THE GREAT USA TO BE THE GREATEST ECONOMY IN THE WORLD! and not its greatest debtor

The market will stabilize and we are at or near the bottom. It is a time to buy buy buy. The fuel prices and the automakers lack of R&D on alternative fuel engines caused them to lose to the foreign imports. This is a reality check a the only way America will reduce it's use of fossell fuel.

You're so worried about the auto makers... who cares.... it's a competitive market and if ford or gm can't get it done... byeeeee... not hurting my feelings what so ever...

If you want to change things maybe you should hunt down the Architects as well as those who Orchestrated this fiasco from hell.... I'm not the one who stuck his head in the sand and bought a Ford gashog nor am I the one who bought a GM boat anchor.

Who are any of you to complain? It's been coming and from what I've read, few of you saw it on the horizon... What happens next is purely up to the auto companies, all of which manufacture fuel misers for the European and Australian markets... they don't want to bring them here, they can go broke...

Amazing how marketing comes up with a line and people flock to it like a fly to dung...  

We used to own nothing but American cars, and have had nothing but problems.  A new transmission for a 2 year old Taurus with 40k miles on the clock?  Come on.  Switched to Asian cars and never looked back.  Zero problems, great mpg, and great resale value.  I will personally find it very hard to buy an American car in the future.  Pretty sad when Hyundai makes a better, higher quality car than GM or Ford.

Congress will pander to the ignorant masses and try to bail out the auto industry as well. When the housing and auto industries fail as a result of bad behavior being rewarded the taxpayer will indeed live up to that namesake.

Save your dollars now and wait until you think the market has hit bottom before you purchase stocks. My guess for the Dow Jones Industrial average is the bottom will be around 7,000. Even in a bad economy some of us were smart and saved up money to get good deals in exactly the fashion I see coming.

This is what happens when you have a weapon of mass destuction .

He just happens to be your president It all starts at the top

alex,

in case you've been in a coma the last 20 years, most of the ''imports'' are built here in the u.s.,,by american workers,,with american suppliers...i should know,,i work for one of those suppliers,,,

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