Check What Happens on Auto World Here…

Posts Tagged ‘Auto Makers’

Dave Foord asked:


 

Late last year, Chrysler and General Motors received 17.4 billion Dollars from the US taxpayer to avoid the auto makers being forced into chapter 11 bankruptcy. Three months later, the two companies have failed to secure 21.6 billion in further loans from the American government. A move that now leaves both companies in a perilous predicament.

 

Chrysler, the smaller of the two companies, has had the most damning condemnation when it comes to its future, with the Auto Task Force appointed by Barak Obama coming to the conclusion that Chrysler is “not viable” in its current form. As a result, Chrysler will get enough working capital to last thirty days, thirty days in which it must conclude its proposed alliance with the European carmaker Fiat. If this merger fails to materialize, the future of Chrysler looks extremely bleak, with Chapter 11 bankruptcy looking like the only option for the third largest automaker in the US.

 

The news for General Motors isn’t much better, with the one time world’s largest car manufacturer being given sixty days to dramatically restructure and cut costs. A restructuring that has already cost the chief executive Rick Wagoner his job. Forced out at the request of the President because the White House said that the present restructuring plans were insufficient and needed to be far more aggressive if the company is to have any long term future.

 

Even more worrying for General Motors is the realisation that the government are thinking that a “quick court-supervised restructuring” may prove to be the best option for success. A “court-supervised restructuring” can surely only mean chapter 11 bankruptcy, a move that could decimate any future sales and as a result plunge the company even deeper into the mire. Talk of a Warranty Commitment Plan – government backed warranty schemes for both Chrysler and GM – will do nothing to increase consumer confidence and if anything may have a negative effect. If either company has a viable future, why do they need the government to back up warranties? As was seen in the UK with MG Rover, government backed schemes can effectively speed up the process of failure.

 

Bankruptcy though, may be the only way GM can survive. Talks with the unions and bondholders have been painfully slow, leading many analysts to think that the only way GM can be restructured is through the courts. With the inevitable backlash that suppliers would feel if either company went bankrupt, hopes are that both companies can meet the demands of the government. A failure to do so will no doubt lead to job losses on a massive scale, job losses that would not just affect GM and Chrysler, but may also drag Ford further into the picture.

 

So with 30 and sixty days left respectively, Chrysler and GM find themselves in a position where they will have to comply with the Auto Task Force recommendations. Failure to do so can only result in one outcome. An outcome that would have repercussions throughout the world, not just in America.



Website content

Lauren Woods asked:


Edmunds.com, the leading online source for auto information, released its prediction on auto sales for the month of March. The online company predicted a three percent reduction in sales this month compared to March 2006.

Experts forecasted a 1.48 million sales output for this month. This prediction is released as the end of the month looms and car makers prepare to make public their sales output for the month.

This year’s March has 28 selling days which is one more than last year. Even with the extra selling day, Edmunds.com still predicts that sales this month will be lower than that of last year. For the extra selling day, Edmunds.com forecasted adjusted and non-adjusted sales figures. The report shows predicted sales figure for the Big Three U.S. car manufacturers and for the three biggest Japanese and Asian auto makers.

For Chrysler, Edmunds.com predicts a reduction of 9.6 percent in sales when adjusted for more selling days and a 6.2 percent reduction when unadjusted. Ford seems to be facing yet another blow if Edmunds.com’s prediction comes through. Ford is predicted to post a 20.2 percent reduction I sales compare to last year’s March when adjusted and 17.2 percent decrease when unadjusted for the extra selling day.

General Motors, completing the U.S. triumvirate, is also predicted to decrease on its sales with a reduction of 4.8 percent adjusted and 1.3 percent decrease unadjusted. The prediction for the Big Three still shows that they have yet to address the challenge being posted by Asian rivals in the auto market.

Asian brands on the other hand are predicted to increase sales when unadjusted. Edmunds.com predicts that Honda will sell 3 percent more units than their output last year if the computation is not adjusted to the extra selling day. If adjusted though, the Asian brand is predicted to post a 0.6 percent reduction compared to last year.

Nissan, another Japanese brand is seen to post a 1.1 percent improvement in sales for the month when unadjusted. When adjusted though, the prediction shows a 2.5 percent reduction. The surging Toyota still looks dominant as it is predicted to post a 4.9 percent increase if the computation is adjusted for the extra selling days, if the computation is unadjusted, Toyota will post an 8.8 percent improvement.

This shows that the Asian brands are still cruising into the heart of the U.S. auto market as steady as an engine equipped with a Subaru cold air intake system.

Jesse Toprak, the Executive Director of Industry Analysis for Edmunds.com, has this to say about the predicted reduction in sales for this month: “This month, the industry faced debilitating winter storms, less compelling marketing messages and reduced fleet sales, so it is no surprise that year-over-year comparisons reflect a relative downturn. Nevertheless, I believe we are still on track for annual sales volumes of approximately 16.5 million vehicles, along the lines of what we saw in 2006.”



Caffeinated Content for WordPress