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July 2, 2008

General Motors Might Go Bankrupt, Analysts Warn

General Motors, one of the world’s largest auto manufacturer, faces liquidity problems that could eventually lead the largest US automaker to bankruptcy, a New-York based analyst wrote in a note to investors today.

Other analysts have also issued similar notes – or should I say warnings – over the past twelve months, saying the automaker giant will need to raise capital to cover continued losses, but $15 billion is a much higher estimate than any of the analysts had predicted.

The company’s share price has plummeted by 85% since Risk Wagoner sat on General Motor’s CEO chair. But he still has his job, while more and more staff cuts are announced to cope with mounting losses. Allegedly, he is now working hard towards aligning GM’s productions with diminished demand for big trucks.

This might not be the best time to be an automaker, as the economic slowdown and high gasoline prices hit the overall auto industry hard last month, but GM sales dropped 18% for the year, ie. twice as much as the sales rate drop of the overall industry.

Automaker                    Sales Drop Rate (June)
Toyota                           9.4%
GM Light Trucks               16%
GM cars                          21.1%
Chrysler Trucks               30.1%
Chrysler cars                  48.5%

8 Responses to “General Motors Might Go Bankrupt, Analysts Warn”

  1. Anonymous Says:

    General Motors Might Go Bankrupt, Analysts Warn | What the Finance…

    General Motors, one of the world’s largest auto manufacturer, faces liquidity problems that could eventually lead the largest US automaker to bankruptcy, a New-York based analyst wrote in a note to investors today….

  2. General Motors is Looking for Partner | What the Finance Says:

    […] The Detroit-based automaker has been facing severe liquidity problems since the beginning of the year, when it posted a fourth quarter loss of $722 millions . This came as a result of a substantial loss at its partially owned GMAC finance unit, rising material costs, and a sharp fall in sales. […]

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