How Do General Motors and Chrysler’s Bankruptcies Affect Ford?
General Motors filed for bankruptcy today, following cross-town rival Chrysler into Chapter 11. What does it all mean for Ford, the only one of the Detroit Three that has neither filed for bankruptcy protection or used any government loans? Well, the Blue Oval released a statement today in which the company says it plans on monitoring further developments closely, and it does not expect any disruptions in its operations. Ford also says it supports the Obama administration’s efforts to help GM recover, as well as the administration’s efforts to help the American auto industry as a whole.
Ford also says that it wants to work with the administration to make sure there is a level playing field in the industry, since the federal government will have a majority ownership of the “new” GM. Finally, the company says it is committed to its own restructuring, and it hopes to avoid asking for any government loans.
Ford is in a strange position here. On the one hand, the fact that the company has avoided bankruptcy and loans thus far could be very attractive to skittish customers who are frightened away from Chrysler and GM vehicles. On the other hand, the government will be assisting those two companies as it ushers them through bankruptcy. It’s true that the Obama administration has pledged to stay out of day-to-day operations and doesn’t want to own GM, but there’s no denying that the administration is propping up GM (and Chrysler, at least til the Fiat deal is finalized) and will do everything it can to help those companies survive. Some buyers may be scared to buy American cars at all, and stay away from Ford for just that reason.
Ford has thus far avoided the troubles that have plagued its rivals mainly because it was able to leverage its debt before the economy collapsed. Should the new-car market erode further, Ford may need help. However, if the economy begins to recover soon, like many expect it will, then Ford may have the best chance out of any of the Big Three to grab the hearts and minds of consumers.
[Source: Ford]
