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Analyst Predicts US Automakers Could Go Bankrupt This Decade
The Daily Auto Insider
Friday, May 30, 2003
May 2003
A recent research report published by UBS Warburg contends that if current trends in the automotive industry continue, GM or Ford could go into Chapter 11, or Chrysler could be dropped from DaimlerChrysler, the Dow Jones newswires reports.
Saul Rubin, auto analyst at UBS Warburg, would not indicate which company is the most vulnerable, but said bankruptcy could overtake any of the three in the next five to ten years. He did say continuing current strategies and trends combined with a moderate performance in the equity markets would push Ford to the brink. A weakening in Mercedes business combined with a change in management at DaimlerChrysler, he thought, could lead to the ejection of Chrysler from DCX. In his forecast for GM, Rubin said declining equity markets combined with general deflation and double-digit health care inflation over a number of years would be insupportable for GM.
The Big Three have adequate liquidity now, but carry a heavy debt in a low to non-growth market. Rubin also predicted that the market share of the three automakers would slip to 50 percent after a high of 90 percent in the late sixties due to stiff competition from foreign automakers. Rubin also predicts that heavy profits from light truck sales, which have shored up the U.S. automakers, will be siphoned off by foreign competitors in coming years.
The Daily Auto Insider
Friday, May 30, 2003
May 2003
A recent research report published by UBS Warburg contends that if current trends in the automotive industry continue, GM or Ford could go into Chapter 11, or Chrysler could be dropped from DaimlerChrysler, the Dow Jones newswires reports.
Saul Rubin, auto analyst at UBS Warburg, would not indicate which company is the most vulnerable, but said bankruptcy could overtake any of the three in the next five to ten years. He did say continuing current strategies and trends combined with a moderate performance in the equity markets would push Ford to the brink. A weakening in Mercedes business combined with a change in management at DaimlerChrysler, he thought, could lead to the ejection of Chrysler from DCX. In his forecast for GM, Rubin said declining equity markets combined with general deflation and double-digit health care inflation over a number of years would be insupportable for GM.
The Big Three have adequate liquidity now, but carry a heavy debt in a low to non-growth market. Rubin also predicted that the market share of the three automakers would slip to 50 percent after a high of 90 percent in the late sixties due to stiff competition from foreign automakers. Rubin also predicts that heavy profits from light truck sales, which have shored up the U.S. automakers, will be siphoned off by foreign competitors in coming years.
