$25 Billion Bailout For Automakers
SUMMARY OF THE REPORT:
The three big automakers industries Ford, GM and Chrysler are seeking up to $100 Billion in low interest government loans. The U.S. auto industry, wracked by unexpectedly high gas prices this year, has found itself once again producing the wrong models at the wrong time.
Big 3 are flush with an inventory of SUVs and large pickup trucks at a time when consumers are begging for smaller European-style minivans and more fuel-efficient vehicles, including hybrids. They are not just suffering from having cars that are not fuel-efficient. They also have cars that are still perceived as not being as “good” as many models from Japan and Europe. Their competitor Toyota and Honda have not only posted better quality numbers in most industry surveys, they also have a tremendous lead in new technologies including hybrid engines.
With sales of General Motors and Ford vehicles down more than 17% this year and the companies' stock prices at lows not seen in decades, one might expect the bankruptcy vultures to be circling over Detroit.
Many analysts expect all three domestic cars companies to face a life-threatening crisis if the U.S. car market, down about 20 percent so far this year, stays in the doldrums. GM and Ford could start to run out of cash by the second half of 2009, a precursor to declaring bankruptcy.
OVERVIEW OF COMPANIES:
Ford Motor Company:
Ford running up huge losses and have been apparently on the verge of collapse for years. Ford reported $8.7 Billion second – quarter loss and 34% fall in auto sale as compare to other automakers.
Ford’s declining economic performance can be attributed to two major factors, decreasing demand of its product and the rising cost of production and operational expenses. Rising fuel cost and increasing competitions, both domestic and foreign have reduced Ford’s sale and led to a loss of market share.
There is...
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