We research, you save.

The HSH Blog

Mortgage & Housing Market News from HSH.com
November 7th, 2008

Ford’s Confidence Fades, GM Drops Merger Talks



The climate in the auto industry is growing worse by the day. As of a week ago, merger talks between GM and Chrysler seemed to be in their final stages — a move that both automakers saw as a saving grace — and Ford reported they were healthy enough to take on the economic crisis without government assistance or through a merger.

On October 31 we published a post that outlined how, despite Ford’s competitors ironing out a merger and requesting government assistance, Ford was confident they could get by on their own. Meanwhile, neither GM, Chrysler, nor Ford’s dreams have come true. Yesterday executives from Ford, GM, and Chrysler met with House Speaker Nancy Pelosi to request an additional $25 billion, plus access to the Federal Reserve’s borrowing window. As for now, GM has suspended merger talks with Chrysler to focus on their immediate problems at hand.

Requests from automakers for government-funded loans are sure to intensify as recent reports have painted a dismal future for the industry:

General Motors posted a worse-than-expected $4.2 billion operating loss and burned through $6.9 billion in cash in the third quarter…

Earlier Friday, Ford posted a worse-than-expected $2.98 billion quarterly operating loss and told investors that it would look to cut salary expenses by 10 percent, a move that follows a 15 percent cut earlier this year.

Both companies will have to embrace aggressive strategies to cut costs, strategies that will likely include job cuts and downsizing:

GM said it would cut white-collar jobs and cut $2.5 billion in capital spending next year as part of a revised restructuring plan now aimed at freeing up $20 billion in liquidity through 2009.

From Reuters:

“We will continue to aggressively reduce costs and manage our cash with absolute discipline,” said Lewis Booth, Ford’s chief financial officer, in a statement.

Share and Enjoy:
  • email
  • Print
  • RSS
  • Add to favorites
  • Yahoo! Bookmarks
  • Facebook
  • Twitter
  • Technorati
  • Digg
  • del.icio.us
  • Google Bookmarks
  • StumbleUpon
  • Yahoo! Buzz
  • Mixx
  • BlinkList
  • Live
  • Reddit

Leave a Comment

Receive Updates via Email

Delivered by FeedBurner

About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

Our bloggers:

Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

Connect With Us

  • rss feed icon
  • facebook icon
  • twitter icon

Compare Lowest Mortgage Rates