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

 

For those of you that think that the industry brought this on themselves, that you should be buying foreign. You, are the reason for this. Send every dollar you can to the foreign countries, support them all you can. Then move your _ _ _ there! You should be earning your money there, not in the USA. Did the American auto makers have some quality problems in the past, you bet they did. Have they corrected this, you better believe it. I have been in the auto sales for 30 years, selling and managing. I have seen good and bad cars. How ever I will support the US made. The US made cars and trucks are just as reliable as any import. The dollars from these cars sold stays in the US. If  these companies go under, the fall out from this will be unlike anything you are seeing now.

I think we all need to support our country's companies.  I think this is the time to buy the stocks at a low prices.  I think the problem is we have lots of options that other countries do not have and if we would just pull together and support what we make in America for once that some of this might start to look up.

Toyota will take the market. Have you ever delt with a Ford or GM car salesman??  Not good.. I've bought 6 GM autos in the last 6 years and (1) Ford. I drive Benz' and toyota's now.

Gator Mike,

My data are normalized and are based on average # of claims/vehicle, indepdent of the volume of any particular vehicle.

I have a very large sample size, so the data are statistically valid.

Out of the 1+ million service contracts, over 40% are on Asian vehicles, although I'm not sure how many are just Toyotas.

AS GM GOES, SO GOES THE COUNTRY!   OR VICE VERSA

i agree with Their own fault. The American cars use gas like it's water and cost a lot from the start. Foreign cars like Nissan and Toyota have basically taken the lead. The American cars provide a smooth ride at your expense. I am sorry for all you Ford and Gm lovers, why because today America can't afford to pay taxes for you. This is coming from a person that lives in a family of five with one person working because [the other one even with high job qualifications can't even get a job] we are living on 40,000 a year with a mortgage that can not be refinaced at this point you do the math it's not even funny it's sad.

Alex Postallian You are incorrect American are the biggest crap cars ever made they dont even last 10 years anymore they fall aprart and there resale value is a joke. So you keep buying those american cars I will wave to you on the side of the highway when your hood is up and the piece of american car is smoking.

Amen to that BIG FISH!

At least the Ford's finally dumped Matt Millen. That's a start to fixing the problem

My Dad's manufacturing plant (running 24-7 for 60 years) died

a painful death because of the NAFTA agreement (thanks, Clinton).

Meanwhile, the great  big sucking sound that Ross Perot was talking

about can still be heard today. The Powers-That-Be have systematically

sold out this country to foreign interests in order to maximize their x%*#

profits; and never looked back to see what it's done to the middle class.

It was greed back then and the financial crisis today is a result of the

same cursed greed. Why should ordinary Americans file for bankruptcy

because their backs are up against the wall? It is time to put a limit on how

FILTHY RICH our "leaders" are allowed to get while standing on the backs

of working men and women. Our way of life is WAY OUT OF BALANCE.  

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