Filed under: Forecasts, Bad news, Industry, Ford Motor (F), General Motors (GM), Toyota Motor Corp. (TM), Economic data
It has been almost three years since Wall Street was concerned about whether the big US car companies like GM (NYSE: GM) and Ford (NYSE: F) would make it. Ratings agencies were factoring the chance of Chapter 11 into their views of the companies. With cost cuts and a new UAW contract, many of those concerns went away.
As investors walked away from their worries about risks at the Big Three, the stocks staged huge rallies. GM moved from $19 in early 2006 to $43 last October. Ford made a similar but less dramatic move.
Now, the issue of how the US car companies will make it is on the table again. In March, Toyota’s (NYSE: TM) sales were down over 10%. But, GM’s sales fell 19% and Ford’s were off 14%. According to The Wall Street Journal, “GM, Ford and Chrysler are all losing money in North America. Continued declines for the Big Three could hurt their turnaround efforts.” One senior Ford executive said that the second quarter could be worse than the first.
If the next few months bring a worsening in sales, domestic car companies could be dealing with 25% drops in units sold. The amount of cost cutting that the firms have made will not weather that, at least not for long.
The future of the US car companies is at stake, and, right now, it does not look very good.
Douglas A. McIntyre is an editor at 247wallst.com.
Entries (RSS)