From Economist.com
AMERICA’S government, after rescuing a financial system brought low by dodgy mortgage-backed securities, now faces the prospect of bailing out deeply troubled carmakers. On Friday November 7th Ford delivered the latest wretched figures for inspection that horrified even the industry’s tyre-kickers, who are well-used to bad news. It revealed operating losses of $3 billion in the third quarter and said that its carmaking operations had got through $7.7 billion in cash. The news from GM, due to come later in the day, is set to be as bad.
Even before the announcements on Friday the beleaguered carmakers were in desperate shape. High fuel costs, the effects of the credit crisis and looming recession contributed to making October the worst month for new-car sales in 25 years. Sales at GM and Chrysler have fallen by 18% and 25% respectively this year and both companies will run out of cash some time next year if they continue to burn through it at the current rate. Ford’s latest recovery plan has put it a little ahead of its rivals but the massive losses it reported on Friday show that its prospects are bleak.
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