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GM, Ford and Chrysler 'could go bankrupt'
13.10.08
General Motors, Ford and Chrysler could go bankrupt, Standard & Poor's warned tonight.
Its analyst Robert Schulz said slowing economies and dwindling sales of cars in the US could force the three totemic car makers under.
"Macro factors could overwhelm them," he said.
Schulz was speaking after S&P said it may downgrade GM and Ford's credit rating deeper into junk bond territory after it predicted demand for cars next year would collapse around the world to the lowest levels since 1992.
Shares in GM fell heavily on Wall Street today, worsening yesterday's 58-year low for the share price.
Ford managed a modest bounce back from its slump yesterday.
The carmaking giants are under massive pressure as the credit crisis makes it harder for buyers to get loans.
Dealers are also struggling to finance their businesses due to the difficulties in obtaining credit.
S&P said yesterday that its debt ratings for GM and Ford, which are already six levels below investment grade at B minus, may be dropped again because of the "serious challenge" they face next year.
Barclays Capital analyst Brian Johnson said GM's shares would fall further.
"With auto sales stalled in the US and beginning to contract in the rest of the world, we believe GM's cash needs are increasing."
