DETROIT — With General Motors’ long-anticipated day of reckoning a little more than a week away, nearly all signs are pointing to the wounded auto giant limping its way into bankruptcy court, but experts say that might not be as bad as once expected.
Car and truck buyers, they say, may not be as fearful of Chapter 11 as once thought, as evidenced by Chrysler’s stronger-than-expected sales in the two weeks after it took the dreaded step into court.
"I think in this case and in the eyes of the consumer, uncertainty is the enemy,” said Jeff Schuster, executive director of automotive forecasting for J.D. Power and Associates.
GM has received $15.4 billion in federal loans and faces a June 1 government-imposed deadline to finish restructuring or be forced into bankruptcy court. Restructuring demands from President Barack Obama’s administration include cutting labor costs, reducing debt, shedding dealerships and brands, and closing excess factories.
The company this week reached cost-cutting deals with Canadian and U.S. unions that still have to be ratified by members, but GM’s unsecured bondholders have resisted an offer to take a 10 percent stake in the company to wipe out $27 billion in debt. They say that’s too small a stake for the amount they are owed.
But even if GM files for Chapter 11, Chrysler’s performance since its April 30 bankruptcy filing has made some analysts optimistic that GM sales won’t "fall off a cliff” as the company’s CEO had predicted in February.
Chrysler’s sales to individual buyers are down 40 percent so far this month when compared with May’s sales of last year, a little worse than the overall market, which is down around 35 percent, the company has said.
Schuster said that’s better than he expected, and he predicted that GM might fare even better if it goes into Chapter 11.
by the associated press
Car and truck buyers, they say, may not be as fearful of Chapter 11 as once thought, as evidenced by Chrysler’s stronger-than-expected sales in the two weeks after it took the dreaded step into court.
"I think in this case and in the eyes of the consumer, uncertainty is the enemy,” said Jeff Schuster, executive director of automotive forecasting for J.D. Power and Associates.
GM has received $15.4 billion in federal loans and faces a June 1 government-imposed deadline to finish restructuring or be forced into bankruptcy court. Restructuring demands from President Barack Obama’s administration include cutting labor costs, reducing debt, shedding dealerships and brands, and closing excess factories.
The company this week reached cost-cutting deals with Canadian and U.S. unions that still have to be ratified by members, but GM’s unsecured bondholders have resisted an offer to take a 10 percent stake in the company to wipe out $27 billion in debt. They say that’s too small a stake for the amount they are owed.
But even if GM files for Chapter 11, Chrysler’s performance since its April 30 bankruptcy filing has made some analysts optimistic that GM sales won’t "fall off a cliff” as the company’s CEO had predicted in February.
Chrysler’s sales to individual buyers are down 40 percent so far this month when compared with May’s sales of last year, a little worse than the overall market, which is down around 35 percent, the company has said.
Schuster said that’s better than he expected, and he predicted that GM might fare even better if it goes into Chapter 11.
by the associated press
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