General Motors and Ford may be in the midst of a North American turnaround, but Fitch Ratings predicts that the Michigan-based automakers will continue to drain their cash assets through 2008 and into 2009 unless the auto market makes a sharp recovery.
Fitch says that GM is in serious jeopardy of another ratings downgrade in 2008 as its North American losses and restructuring costs continue to eat away at the automaker’s liquidity. GM posted a first quarter loss of $3.25 billion, largely due to the company’s GMAC mortgage arm.
While Ford is still losing money, Fitch says that it is in a far better position that GM and could actually see a ratings increase to stable.
“In the absence of a rebound in economic conditions and industry sales through 2009, both companies are likely to remain cash-flow negative during this period,” Fitch told Automotive News. “(GM) liquidity has been supported by numerous asset sales, but the lack of further asset sales could result in a downgrade of GM in 2008.”
GM has also been hurt by a nine week strike at American Axle and an exposure to Delphi that could cost the automaker $8 billion this year.
05/07, 4:06 PM
posted by:
HemiRoadRunner
I like how these people get paid to give their opinions on how bad they think companies will lose their @$$’s. What a bunch of $H!T heads. I wish their business of degrading hardworking companies would take a nose dive so we could talk about how much they suck.
05/07, 4:14 PM
posted by:
gizmo2
Don’t you just like it when these reality difficient financial analyst come out and predict doom on companies and the economy? Here is a predection smart heads, as the economy get harder people will start spending on food and gas and necessary items and NO money will be spent on the media in which your negative column appear.
05/07, 4:35 PM
posted by:
mayer_ray_nagin
Cash drains???
I didn’t a car company could get married and have a wife.
05/07, 4:39 PM
posted by:
bolex
…more bull**** from the ‘experts’. these types are quick to predict, but we never hear from them if these ‘predictions’ were ever right or wrong. to make it worse these dip****s get alot of money to tell there assistances to gather information for them…..’experts,analyst’..gimme a ****in break…
05/07, 4:40 PM
posted by:
xyunya
Yeah, we all should live our lives with head stuck in the sand or worse. Actually, we filter news that we don’t like anyway, but the fact stay the same: GM will loose money and Ford as well. For the most this is not worthy news, especially for those who don’t have skin (cash) in the game. Those news a re worthy for those who have $$$ to invest and invests in either debt obligation or equity of those companies. Chrysler is not mentioned because it is a private company, in case anyone wonders.
05/07, 4:43 PM
posted by:
400horseSS
Ya dont say.
05/07, 5:07 PM
posted by:
Z06ified
GM has almost $30 BILLION in cash on hand, and Fitch is trying to tell me they’re facing a liquidity crisis? Ford was nearly on its death bed this time last year, they recently posted two profitable quarters, and now they’re fine and dandy and in much better shape than GM? Give me a break! Where does Fitch hire its analysts? Cracker Jack U?
Not to mention they completely ignored the strong international sales GM enjoys, which is now larger than their North American sales, and they ignored the fact that most of the losses GM reported were non-cash charges. Maybe they don’t know what a non-cash charge means.
05/07, 5:29 PM
posted by:
shaver
GMs big problem is that its usually profitable GMAC arm is right in the middle of the entire mortgage industry debacle. The mortgage crisis will continue to kill GMAC (for atleast 1.5 years) and will hurt the company overall more then any auto sales slowdown or competition.
05/07, 7:40 PM
posted by:
enigmamf
@Z06ified: Ford has $29 billion cash on hand as of April, and that’s before the $2.3 billion sale of Jaguar/Land Rover. That means a percentage of operating costs, Ford has much more cash on hand.
05/07, 7:49 PM
posted by:
TOZO
Fitch is so stupid, as are all the other rating companies. People need to stop listening to these idiots who think they know it all, but really don’t have a clue.
05/07, 8:46 PM
posted by:
bolex
fitch is a bitch….sorry couldnt hold it in.
05/07, 9:00 PM
posted by:
ARMY Strong
i even never hear of fitch?
05/08, 10:26 AM
posted by:
xyunya
enigmamf, Ford mortgaged all of it assets 6 months ago for 23 billion USD. It could not operating capital from any other source. Yes it had 2 profitable quarters but not to a tune of 6 billions. Unless Ford involved in money laundering, I can’t see other source of 6 billions. Kerkorian and his Tracinda do not invest in Google: modus operandi there is to take distressed companies into profitability. Ford’s troubles are far from over. GM has 30 billions in cash and draws on operating resources from other sources. And shaver is right, GMAC will drag GM performance into crapper for next few years, regardless of what they sell or don’t sell car wise.