September New Car Sales Set to Fall Off a Cliff
Even before it charts the changes, The Detroit News is ready with the excuses. In fact, the spin starts with the headline: “Soft economy drags on car sales; Analysts expect consumer jitters, effects of Hurricane Ike to stunt automakers’ numbers by 22 percent over last year.” Yes, yes; the whole market sucks. But which automakers are going to get hammered? (No prizes for correct answers.) Scribe Bryce G. Hoffman saves the money shot for paragraph 16. “GM, Ford and Chrysler LLC are expected to show continued erosion in U.S. market share compared to a year ago and sharper sales declines compared to their Asian rivals.” At least Hoffman reminds readers that GM CEO Rick Wagoner said September sales would be no worse than August’s. And earlier in the piece, Ford analyst Georgie Pipas pipes-up with “It will be one of the largest declines that we’ve seen for some time.” And just in case you thought Ford’s returned to its founder’s faith in plain speaking and hard decisions… “Pipas said it is too soon to tell how much the drama on Wall Street is affecting sales. ‘They can potentially shake consumer confidence,’ he said. ‘It definitely deserves close attention.'” Ya think?
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Everybody and their brother is just sitting on their money now waiting and watching to see how the economy pans out. I don't think you're going to have too many people going out and making impulse buys on non-essential items when they're not even sure they'll have a job in the future.
What are the odds that GM, et al, have waited for this very moment when the economy is set to implode to finally file Ch 11? They can conveniently claim that "current market conditions" force them into protection---it was not the decades of squandering resources and opportunity.
I don't believe that any of the 2.8 will file for Chapter 11 or 7 because they want to. It will happen when they literally have no other choice. In fact, they might get forced into an involuntary Chapter 11 or 7 proceeding by the creditors. Most bankruptcy cases are voluntary, which means that the company starts the ball rolling. But, either the company or it's major creditors can initiate this action. Creditors file when the fear that the company is going to preferentially do better by some creditors than others. Before a bankruptcy filing, a company can pick and choose who it wishes to pay for any reason it likes. Once the thing is in front of the courts though, the court has to approve any significant actions and there is a pretty well defined priority list of who gets paid how much and in what order. I don't think there is an issue of any of these companies waiting for the right moment. I'm pretty sure all of them don't want to go there. But, they may not have a choice. You can read a brief summary of involuntary bankruptcy here: http://bankruptcy.lawyers.com/Facing-Involuntary-Bankruptcy.html
...and everyone at GM drones on, "Wait for the Volt...wait for the Volt...wait...CAMARO!" Good luck guys. Your Hail Mary was the Malibu and while it wasn't a thud, it seems to be another darling of the rental market. I swear I saw that sign somewhere in Scotland! I (barely) remember crawling out of a pub near the water and then things turned dark!