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 Motors 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%
The Automotive Industry
The automotive industry has come a long way since cars first hit the streets in the early 20th century. Technology advances have meant cars have become faster, more efficient and increasingly more comfortable for drivers and their passengers.
Since cars are now a necessity for modern-day life, car manufacturers are also continually exploring ways to make cars safer and longer-lasting. In addition to cars, there is also a range of other motor vehicles such as buses, trucks and motorcycles which maintain the importance of this industry across the globe.
With cars being part of so many people’s lives, the automotive industry will always be an important sector of any economy.
- I am a financial services writer with experience in forex trading and stock market analysis.
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