That's what IHS Global Insight is saying. It's also looking less likely that any help will be forthcoming before the administration changes.
Of course the question being asked is "what if...?" What if these companies file for Chapter 11? Most feel if that happens, Chapter 7 is sure to follow. Comparisons with the airlines having gone bankrupt are meaningless. Air flights for most people are a one-time deal. Buying a car is another matter. What happens with warranty claims, or anything service-related. Would you buy a car from a company that's filed for Chapter 11? The answer for most customers would be a loud and clear "NO WAY!"
Here's AutoObserver's take:
Chance of GM, Chrysler Bankruptcy 75 Percent Without Loans, Says IHS Global Insight
Automaker Rescue Package Dead for Now
Tracking the Bailout: When the Music Stops, Who's Going Bankrupt?
estreka says:
07:37 AM, 11/21/08
I don't think a disparity between the airlines and automakers would be so drastic. Automakers would certainly use Ch 11 to their full advantage (one would hope).
As far as a reduction in sales, all I have to say is, "what sales!?" The market is as repressed as it's going to get. Bankruptcy isn't going to impact sales that much.
Chrysler is the only company I'd imagine that goes straight to Ch 7. Prospects are so dim for this company that I don't think anyone is fooling themselves.
flicmod says:
08:32 AM, 11/21/08
I foresee Chrysler getting sold to a company like Tata, actually. The Indian economy is fairly strong right now and has been on an upward trend for the last several years. If Tata is still interested in getting mainstream cars into the US, Chrysler may be the way to do it.
But I agree with estreka on the Ch 11 issue. People like to say that it's not that simple. Of course it's not that simple. But with Ch 11, the company will have a better chance than burning through several billions of dollars of taxpayer money just to "stay afloat" while they continue on a downward spiral. It's most definitely not dumb to make a comparison with the airlines, either. As estreka said, sales are dismal for the Big 3 right now anyhow. It won't hurt them.
I think what people are doing is still trying to picture the American automakers as as big and as competitive as they are now while being under Ch 11. That won't happen. It'll be a rough road and people will lose their jobs. But the odds are that it won't wreck the company. If anything, after a few years under bankruptcy protection, the company will come out profitable again. The jobs lost will be a lot lower than with a Ch 7 filing, and the taxpayers won't have their money devalued anymore by the excessive spending of the federal government.
ateixeira says:
11:15 AM, 11/21/08
Ford sold Mazda, GM sold Suzuki, get on with it. Dump Hummer, Saab, Volvo, etc.