Fallout: The Financial Crisis

A big day ahead for the Big 3

Alisa Roth Dec 1, 2008
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Fallout: The Financial Crisis

A big day ahead for the Big 3

Alisa Roth Dec 1, 2008
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TEXT OF STORY

KAI RYSSDAL: Tomorrow’s going to be a big day for the auto industry. November sales figures are due. Nobody’s expecting anything other than gruesome. The Big Three do have something to distract them. Tomorrow’s also the deadline for carmakers to present their bailout plans to Congress. Marketplace’s Alisa Roth reports.


ALISA ROTH: The heads of the Detroit Three put up a united front when they came to D.C. before Thanksgiving to ask for money. But Congress wasn’t all that impressed by their show of solidarity. So it sounds like they may part ways when they come back this week.

Erich Merkle is an auto analyst for the consulting firm Crowe Horwath. He says the three are standing by each other.

Erich Merkle: Their needs are different because the companies aren’t the same. Ford has a much stronger cash position than the other two. So clearly, you know, some of the needs that GM and Chrysler have are going to be different than that of Ford Motor.

And Ford and GM are both public companies. So all kinds of investors’ money is riding on their fates. On the other hand, Chrysler’s privately held, so in a way its fate is mostly its owner’s problem.

Presumably, by now the CEOs have come up with some kind of plan to present to Congress.

The latest discussion is about getting rid of some more brands. Word on the street is GM’s ready to lose Saab, among others. And Ford says it’s contemplating options for Volvo.

Dave Cole is head of the Center for Automotive Research. He says this isn’t necessarily what the carmakers want to do.

Dave Cole: When your cash is gone, you’re gone. And so first things first. And the first thing is to do whatever you can to survive. And under normal conditions of the market, I don’t think Ford would even be considering the sale of Volvo.

So the fact Ford is considering it might be proof of how abnormal these conditions are. The trick will be for Ford and its friendly competitors to make that point to Congress.

In New York, I’m Alisa Roth for Marketplace.

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