Bad news for US 'Big Three'

[News_Stig]

Latest news on the US 'Big Three'.........not good :-

Starting with Ford:-

The dire situation facing America’s car makers has been emphasized by the revelation that Ford could run out of cash next year if it doesn’t slash spending.

The company’s latest financial update revealed that it posted a loss of $129m (£81.8m) for the last quarter of 2008, with the worst performance coming from the north American part of the business. That’s less than the $380m (£241m) loss it posted for the same period last year, but the company’s running costs were $7.7bn (£4.9bn) during the last quarter.

That leaves Ford with cash reserves of just $18.9bn (£12.1bn) – enough to last for just seven months if it continues to spend money at the same rate.

Ford is responding to the crisis with plans to conserve cash reserves with massive cuts. These will include reducing spending by up to $5.5bn (£3.5bn), doing away with all bonuses and slashing both engineering and advertising costs. Ford has already pulled all of its UK advertising across all mediums until the end of the year.

Despite the gloomy news in America, Ford of Europe made a profit (albeit down by $224m), and it’s south American operations posted an increased profit, up from $94m (£59.7m)to $480m (£304.9m).

GM & Chrysler:-

Merger talks between General Motors and Chrysler have been suspended in the wake of GM’s disastrous third-quarter financial results.

On the same day that Ford announced a looming gap in its liquidity GM has announced a loss of $2.5 billion (£1.6bn) over the last three months. Experts say GM won’t have enough money to complete its potential Chrysler merger and must rely on the US Federal Government for help.

Analysts suggest GM only has enough money to operate until the end of the year. Beyond that, the car giant’s liquidity will then fall short of its operating spend by June 2009, putting its future in grave jeopardy.

GM is blaming the global financial crisis for its position.

“Consumer spending, which represents close to 70 percent of the U.S. economy, fell dramatically,” said CEO Rick Wagoner, “the abrupt closure of credit markets created a downward spiral in vehicle sales.”

GM’s European wing – made up of Opel, Vauxhall, Chevrolet and Saab - posted a 15 percent loss in revenue compared with this time last year. GME’s revenue was £4.75bn compared with £5.6bn this time last year.

Worldwide, GM sold 2.1 million vehicles; 11 per cent fewer than the company sold in 2007.

There’s no word yet on what GM intends to do to improve its financial fortunes and bolster sales.

“The US government’s actions to eventually ease the credit crunch are an essential first step to the economy’s recovery” said Wagoner. “But further strong action is required,” insisted the GM boss.

And in summary:-

There’s no way all three carmakers can be bailed out, when their markets have been decimated. It might seem unimaginable, but by next summer the ‘Big Three’ could have all either collapsed or been forced in Chapter 11 bankruptcy protection.