GM shares hit 53-year low, while Chrysler dismisses bankruptcy rumors

[RedEarth]

Source: Reuters

GM, which lost a combined $51 billion in the past three years, lost another $3.25 billion in the first quarter, as higher gas prices prompted consumers to shun large trucks and SUVs, long the bread-and-butter segment for U.S. automakers.

The share price of General Motors dropped nearly 10% and dragged down the auto sector on Thursday as Goldman Sachs cut GM to a “sell” rating. The investment bank also warned that the struggling automaker could have to raise capital and cut dividend payouts amid a brutal industry-wide downturn.

The slide in GM shares caps a period of growing concern about the liquidity risks to U.S. automakers and suppliers from a domestic auto market reeling from record gas prices and the impact of a housing slump and tighter credit.

The Goldman Sachs warning, including the unusual “sell” call on the U.S. auto industry’s largest player after a period of sharp stock price declines, prompted selling across the sector.



Read more: http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080626/REG/988635023

[cliss]

1. You watch. Chrysler will file for Bankruptcy.

They will close down their car plants. For maybe 4 weeks or so.

Next: Japanese car manufacturer will suddenly appear out of nowhere. The plants will open their doors again. People will go back to work.

Japanese will start making little teeny, tiny SUV's, gas-miser cute cars.

And the CLUELESS Directors of Chrysler will sit there and wonder what the hell happened.

[Purveyor]

4. GM and Ford will also be into bankruptcy within the next 18 months.

Their production lines won't skip a beat but the union contracts and retiree obligations will be wiped from their books.

Workers will be forced to except the lower wages and lack of benefits as there will be no other jobs as an option.

[Zachstar]

8. If GM and Ford go into Bankruptcy that means America is deep into depression.

IE the workers walk out and within a few feet grab some newspapers and set up a resting area. Because there will be no other jobs.

[Blue_Tires]

6. not quite...

iirc, U.S. plants are locked into the UAW...If a plant is running, it must have UAW workers, and the Hondas and Nissans of the world would sooner build a plant on the moon than hire union...Foreign automakers favor anti-union states just in case the workers try to get cute...

[Zachstar]

7. Ya dispite the conspricy crap you have going on there.

The simple fact is Japan pays a good amount they give good time off and they build cars here out of good will.

[Blue_Tires]

9. they build cars here out of good will?!?

"good will" is antithetical to any corporation's profit margin...Our benevolent friends in Japan and Germany build cars here because it helps their bottom line...PERIOD...They have taken advantage of our historically slanted trade imbalance, and economically depressed areas dangling heavy tax cut incentives (no coincidence that most of these areas where they build plants are in right-to-work states)...And they save cash not having to ship hundreds of thousands of cars across the drink every model year. The second this gravy train stops (the UAW still tries unsuccessfully to organize a foreign plant here and there once in awhile), our goodwill ambassadors will be in Mexico before you can blink...Not to mention what could happen a generation from now when the pension/healthcare costs for retirees start to add up...

I can't fault a company for making the best of its opportunities, since that is the reason it exists. And most of the employee reviews of these plants are generally good...But never think for a moment that they are some sort of humanitarian group...

[Zachstar]

10. I never said they were humanitarian group

I said good will because of the way things are set up in the world it is QUITE easy for them to make the cars elseware.

And adding to it is.

#1 Their cars are normally of higher quality.

#2 Their cars are normally more reasonably priced despite paying reasonable wages and benefits.

#3 They are usually the first to see trends http://en.wikipedia.org/wiki/Honda_Civic (The need for a good cheap car over fuel hogs that make alot more noise) The europeans also easily trump us in that.

The fact that unions ran "Buy American" campaigns point to how bad things have gotten with our companies compared to theirs.

I have no intentions of ever purchasing an American car. If I get a car it will more likely be a ZENN from Canda or a Civic from Japan.

[Tommy Jefferson]

2. Perhaps the government will bail them out.

Perhaps the government will bail them out.

[llmart]

3. Ah, yes......

Hire "two-by-four" Nardelli as CEO and pay him millions of dollars so that Chrysler goes bankrupt and us taxpayers should bail them out. That's how corporate America works. Then Nardelli will leave and get the golden parachute for his outstanding leadership.

Amazing.

[scarface2004]

5. i expect between 400 and 500 of the fortune 500

to declare bankruptcy before the end of the summer...whereby bush will say the economy is fundamentally sound!!!

[Zachstar]

11. What makes you say that?

That many companies going bankrupt means beyond Depression.. you know that right?

[Joe Bacon]

12. Well, maybe if they made hybrids we could afford...

The first car I bought was a brand new 1970 1/2 AMC Gremlin, and the total price of the car was $1,970.50. It lasted 12 years, built like a tank and got good mileage.

Now, $1,970.50 buys you half a Segway.

Meanwhile, Detroit keeps building overpriced junky Hummers and SUVs while their lobbyists still fight improved fuel efficiency standards. From the economics courses I took, I remember that if you lose market share, you're supposed to innovate with new products. Isn't happening.

[carlyhippy]

13. we looked at hybrid vehicles, SUVs when I bought my new vehicle

they were at least 5,000.00 more than my xterra. The auto makers have us coming and going, some people need bigger vehicles, so they make a hybrid, then make it more expensive, they are going to make their money in one way or the other.