This afternoon Ford and GM released their long-awaited figures for the third quarter of 2008.
The news couldn’t be more apocalyptic. General Motors is on the verge of collapse and may not have enough cash to operate beyond the end of this year, according to its financial report.
Recently, I suggested that barring a disaster, GM would take over the Chrysler Group. Well that disaster is here.
According to the reports GM needs $11bn in ready money every month to pay its bills. GM’s own just-released ‘liquidity statement’ admitted that it will definitely not have enough money in the first six months of next year to continue trading. And that’s if it gets to January 1 2009.
Unsurprisingly, the takeover talks with Chrysler have been halted.
Ford, meanwhile lost a modest $129m in the third quarter, but managed to burn through $7.7bn in cash. Analysts say that Ford, too, will run out of cash in the middle of 2009. Ford bosses counter that they hope they can scrimp and save through to the end of 2009, hoping for an upturn in the economy.
With no more credit for the companies, all eyes are now on the US Government – and President-elect Barak Obama – to see whether money can be found to keep GM alive beyond the middle of 2009.
Ford only has six months’ more breathing space. Chrysler, meanwhile, is heading fast for the knackers yard.
There’s no way all three carmakers can be bailed out, when their markets have been decimated. It might seem unimaginable, but by next summer the ‘Big Three’ could have all either collapsed or been forced in Chapter 11 bankruptcy protection.