GM, Chrysler may face '09 cash crunch

GM, Chrysler may face '09 cash crunch http://tinyurl.com/5lma5t
Fitch Ratings gives automakers a negative outlook, lowers rating to below investment grade.
Mike Ramsey / Bloomberg News
General Motors Corp. and Chrysler LLC may face a cash squeeze next year as U.S. sales decline on a slowing economy and rising gasoline prices that are pushing buyers toward more fuel-efficient vehicles, Fitch Ratings said.
Fitch lowered the issuer default ratings at GM and Auburn Hills-based Chrysler to B-, six steps below investment grade, from B. Both companies have a negative outlook, meaning they could be downgraded further, Fitch said in a statement Wednesday. Ford Motor Co.'s rating is being reviewed.
The changes reflect concern that efforts to cut costs and revamp product lines haven't been enough as gasoline at $4 a gallon erodes demand at U.S. automakers, which generate more than half their sales from pickups and sport-utility vehicles. Through May, GM's sales are off 16 percent from a year ago, Chrysler's are down 19 percent and Ford's have lost 11 percent.
"Negative cash flows could result in Chrysler's liquidity position reaching minimal required levels in late 2009," Mark Oline, an analyst at Fitch, said in Wednesday's report. Fitch expects "new financing activity will be required over the next 18 months to keep GM's cash position over the minimum comfort level," he said in a separate report.
While Dearborn-based Ford may have sufficient liquidity to weather current conditions through 2009, "unrelenting industry and economic pressures make it increasingly likely that Ford will be unable to maintain its existing ratings," Fitch said.
Standard & Poor's said last week it may downgrade debt ratings on Detroit-based GM, Ford and Chrysler for similar reasons.
GM will probably drain more than $10 billion in cash this year, and may have to borrow more money to stay above the minimum of $12 billion to $14 billion needed to pay operating costs, Oline said in the report.
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CASH SQUEEZE? I hope they survive, but I wouldn't bet on all three surviving the latest high gas price problem. Of course by not having a good line of smaller cars they made their serious problem worse. They sucked many people in with their ads showing SUVs doing the impossible. The latest CUVs aren't that great on fuel mileage either, some burning more fuel than a mid sized car of the last 15 years. A significant reduction in fuel consumption is needed.
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Give me a break. GM, Ford, and Chrysler didn't "suck" people in to buying there SUV's anymore then Toyo and the other Import companies did. People wanted SUV's, so that is what GM produced. Toyo did the same. Toyo also started making there cars bigger, faster, and more powerful...But, Toyo-nuts don't care about that...
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Agreed, the American people did it to themselves. There was no effective leadership AWAY from the gas guzzlers, however. You would think that people would consider that there might be a future that is not so energy free as our past has been.
If you bought a Honda SUV or some of the other imports, you also would not have gotten very good mileage. I have a step daughter who made just that choice, even though I counseled her against it. She loves the car, hates the economy.
But, the damn little 4 banger Sonoma of my FIL is as bad as the SUVs, and gets no better mileage than my old Dodge 318 full sized van. And is gutless. A real POS.
I have no patience with those who moan about the price of gas.. you were warned, you should have seen it coming. Now just pay up or pedal.
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Leadership my ass - it is NOT the function of the car companies to lead me anywhere (in spite of the what the Bolsevics in our government believe)!!! Their function is to make the vehicles I and other Americans WANT to buy.
This country isn't the old Soviet Union with its command economy yet (though we are rapidly headed in that direction).
Regards, Bill Bowen Sacramento, CA
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You need to break your habit of being Toyota critical and observe why they are winning over consumers. You sound like a big 3 car executive who didn't face or understand the reality of what has been happening in the NA market. Yes Toyota produces large vehicles, but they also did much to improve their smaller vehicles. They did it themselves, not by importing product from a failing Korean company. The consumers aren't as stupid, they replied with their purchases of "foreign" vehicles. Most they buy are made in NAFTA.
I'd prefer to buy a NA compact vehicle, but only one is close to my desires. I'm waiting as long as my oldie mid sized car runs well, but when it's reliable time has gone I'll have to buy a new car. On my current short list is are 2 Nissans, 2 Toyotas and the Ford Fusion well down.
Now Toyota is selling many smaller fuel efficient cars. In our city the vast majority of taxis are Corolla, Camry and Prius in that order. The mid sized NA cars that were once our taxis are gone...gone!
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Didn't you mean to say "Now Toyota (etal) is IMPORTING many smaller fuel efficient cars."
When you actually go and get a TOTAL DRIVE HOME on a similarly equipped Toyota, Nissan and fusion, you will likely drive home the fusion.
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