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

 

Good! Good! Good!.

To all  of the people that voted George Bush, yoy got what you paid for! I only can hope it"s goes lower.

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keep your cool - we'll muddle thru - sooner if we go after the profiteering Ceo's and their associates

When the Little 3 were mass producing the big margin SUVs and Texas size trucks for people who wanted them to go from home to the grocery store or to the soccer pitch, the Asian automakers were making relevant cars that were directed to smart people. Eventually, the gas price went up and the SUVs and trucks became irrelevant. The Little 3 were bailed out to the tune of 25 billion of your and my dollars. It will take time until their products are relevant again and I do believe they can make it. Until that time, people will suffer the consequences of their managements' arrogance.

It is unfortunate but this is life.

I worked my way through college working at General Motors on the assembly line in the late 1970s.  My dad retired from that plant and it feed our family for over 30 years.  We lived in a little house in the suburbs of Detroit and had a nice life for a blue collar family.

In WW2 that factory made the B-24 Liberators and other aircraft to help defeat the Japanese.  Like every other major manufactures in the US they have there faults, in the gas embargo of the 1970s we got caught with sorry gas hogs.  GM worked very hard over the next twenty years to match and beat Honda and they have.

If you want to see the middle class in America die, let Ford and General Motors go under.    

Everyone needs to stop the panic! Immediately! Look around, people are running scared in the streets. If we as Americans don't stop ourselves and stop looking to the goverment to solve our problems, then we shouldn't be Americans any more. We are all about vitality, perserverence, and strength. We are the only ones who can fix this problem. Keep your money in the market, you'll be the one to crash it if you don't, buy stocks now, they are a deal. Buy cars, if you don't I can't buy your product. See what I am getting at? It's up to all of us now, the goverment has proven they can't do anything. It's going to take them a long time to put thier agendas in place. And by then there will be a new power changing everything anyway. I don't care if you buy American or not, just buy. The banks are not as tight as you may think. I do it everyday with customers, these custoemrs aren't panicing even though they have more to lose than most of us. But if we all stop, then we will have no one else to blame but our selves.

Although the unions are mostly to blame for the cost of vehicles in the US, even Japanese car sales are suffering where no union exists.

Problem is pure and simple, lack of sufficient regulations on financial insitutions and wall street allowing unchecked greed and fraud to dominate.  If we actually had a leader running for office instead of a politician, he/she would round up those responsible and criminally prosecute them to ensure this can't happen again.

As for the car business, once credit markets return (which they will), people will still buy cars.  Last month over 1 million new cars were sold in US.  Someone is still buying....

Just bought a new Acura TL ,900 miles on it ,transmission blows!    8 days waiting for a new one,  what a joke!   Never had a problem with my old Explorer 129k miles and 1996 Mustang Cobra!  

Morton wrote:

Ford's been ramming fuel-guzzling sports utility vehicles and trucks down our throats for decades.  Did the average American REALLY need to drop $30,000 on a vehicle that nabs paltry gas mileage?

Neither Ford nor GM felt it necessary to adapt to changing market conditions when the opportunity arose.  They are partly responsible for the mess we find ourselves in today as they helped perpetuate the American need for the more grandeur and ultimately unnecessary luxuries in life.

Perhaps some new automakers will arise from the ashes of this economic burn-out.  Companies that market what consumers need versus an over-priced ego-trip.

(end)

The big three have sold big gas-guzzling SUV's because that's what Americans have wanted, not because they are stupid.  They tried selling smaller cars, but Americans turned them down.  Who is to blame?  Us!

Although not American, the best car I ever owned was a '72 Volkswagon Beetle.  It was cheap to maintain, very easy on gas and got me there and back.  People on the road laughed at me for the wimpy top speed the VW had.  The big three would not even consider a small, cheap on gas vehicle because we Americans wanted big, big powerfuil cars and trucks.  Again, who is to blame?   We are.

I now drive a Ford Focus which is a very good quality car.  I test drove Toyota, Honda and Nissan and the Ford Focus was the cheapest.  It gets great gas milage and has a 100,000 drive train warranty which is better than the Japanese cars.

Want to help save our economy?  Buy American and quit feeding the Chinese and Japanese all of opur US dollars..

Its not just the auto biz its all of america and the world now! Trickle down economics did'nt work. Lets try trickle up economics, spread the cash around to the people.

And lets not make the same mistake in the voting booth this time.

Ford and GM are dominating the global market of automobiles.  Strict US Government regulations are starving the auto giants out of the US.  Ford has a five passenger vehicle selling in europe that gets 65 MPG.  Can't sell it here though because of regulations....

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