Standard & Poor’s today warned that General Motors, Ford Motor Co., and Chrysler LLC could be headed for bankruptcy protection.
S&P analyst Robert Schulz told Bloomberg today that “macro factors could overwhelm them at some point.” Schulz said operating-cash needs at GM, Ford and Chrysler are “substantial, so if it looked like they were going to be pushing toward that number because of these operating losses and cash usage, that’s sort of the point where they’d have to consider” bankruptcy.
GM said “bankruptcy is not an option GM is considering.”
Won’t a ratings downgrade make life even more difficult for Ford/GM, and make bankruptcy more likely? Isn’t that what Alanis Morrisette would call ‘ironic’?
That linked Bloomberg article says that the lack of available credit to help people buy cars is a huge problem for Ford/GM. I’d be very grateful for some perspective on this from across the pond. Just how strict have underwriting standards become? It seems counterproductive especially for Ford Credit but also to an extent for GMAC to restrict their consumer lending so tightly, given that a large part of their raison d’être is to help Ford/GM sell cars. Have they restricted their new business volumes, or is the lack of loans for consumers mentioned by Bloomberg the consequence of other funders exiting the market?
Any/all answers welcome!