Filed under: Deals, Ford Motor (F), General Motors (GM), Recession, Financial Crisis
With General Motors (NYSE: GM), Ford (NYSE: F), Chrysler and the rest of the Detroit auto industry looking prone to get a massive 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 superior 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.
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