Chrysler, Ford, GM Downgraded on Cash Flow Concerns
Marketwatch gives us our usual dose of pre-weekend gloom. It reports that Moody's "lowered Chrysler LLC's outlook to negative from stable and affirmed its B3 corporate family rating and probability of default rating… This erosion in market fundamentals could stress Chrysler's liquidity profile by late 2009 or early 2010." More bad news [via] The Australian: Ford Motor Credit is headed for the buffers: "Now the auto lender, faced with falling asset quality and burgeoning provisions for credit losses, may have to tap its parent for help at a time when Ford Motor is reeling from a sales slump and deeper production cuts." At the same time, CNNMoney reports that Standard & Poor's "put Ford Motor Co. on a negative credit watch list because of worries about the health of the U.S. auto industry… S&P also placed General Motors and Chrysler on CreditWatch with negative implications. "We have renewed concerns about all three automakers' future cash outflows in light of the prospects for U.S. sales for the rest of 2008 and into 2009," announced S&P credit analyst Robert Schulz. "It's hard to imagine what else you can throw into the mix to make things worse," added fellow analyst Efraim Levy. Hard, but not impossible. For example, what happens to Ford and GM's supply chain when Chrysler files (on a Friday)?
WSJ reported that June sales will be down at least 30-40% at the D2.8, 10% for Toyota and 2% for Honda. This should put it on pace for 12.1 million cars sold worse month since 1989 for June and worst season since 1992.
Not only are the automakers trying to dump the trucks and SUV's with massive incentives, in this part of California, there are considerable numbers of late model trucks and SUV's for sale, via the newspaper, dealerships, on-line, auto sale magazines, street corners, Wal Mart parking lots etc. I would guess it's the same scenario all over the country.
Yesterday I was driving by a Toyota dealer and they had one of those red LED electronic signs. It said "$6000 off new Tundras!". Since I doubt that ToMoCo is offering that much in a customer rebate it means the dealer is discounting all on his own or (more likely) ToMoCo is offering dealer only incentives so the dealers can lower their price. The imports often do this instead of offering consumer rebates so it doesn't seem to the public they are having "fire sales".
Local GMC dealer has a big banner that says $12K off of their trucks and SUVs. I'm sure there is fine type restrictions but anyhow... Sure would like to have a big garage where I could park one of these for occasional use. Might be a truck I'd keep for 20 years just for towing and hauling. Wash and wax on the weekends.