Tuesday, November 18, 2008

Car firms can’t be bailed out like banks

Car firms can't be bailed out like banks

The European car industry cannot expect to be treated in a similar way to the financial sector and countries must not offer automakers unfair incentives, the EU competition commissioner said on Tuesday

Posted by mark @ 10:32 AM (916 views)
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8 thoughts on “Car firms can’t be bailed out like banks

  • Ford has just (today) sold 20% of Mazda to raise funds for alternative fuel cars, new models etc. It still holds 13%+.

    $500m+ should last a while….

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  • 500m wont last long…

    GM burned through $6.9 billion during the third quarter, leaving it with only $16 billion on hand as of Sept. 30. But it needs $11 billion to $14 billion to continue normal operations.

    Ford and Chrysler have more cash relative to their needs, mostly from money they borrowed prior to the current credit crunch.

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  • “Car firms can’t be bailed out like banks”

    Of course not, after all car firms actually make stuff that people need.

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  • harold – if a car firm goes there is minimal contagion and if there was truly need / demand for their cars then why would they fold? If a (for example) high street bank collapses there is massive contagion. Its easy to say that the banks dont deserve to be bailed out but what happens if they werent? As people pull in their purse strings one of the first things they delay or even abandon is the purchase of a new car. They make do with second hand cars or try to extend the life of their own.

    Banks do “make” stuff people need – its called money!

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  • If GM and Ford go bust, the contagion is far reaching in terms of jobs and credit owed to banks. It will be a difficult call for the new president, and he will likely bail them out IMHO.

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  • if the bailout goes ahead in the USA, I doubt vauxhalls will see any money, nor will opel.. it would be in breach of EU laws.

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  • Fj – you are looking at that from one side. IF GM / Ford fails granted there are lots of jobs that go, but how will the debts be realised by liquidators? The sale of assets methinks. The contagion in credit markets wont be that much…. now having said that there might well be contagion but minimal in comparison with the folding of a major US / UK bank.

    Re EU laws – we eventually these will be abandoned much like Gordys golden rule. Although everyone says no to protectionism – i wouldnt be surprised meself if we have that through the back door.

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  • well if they slashed the prices they would sell their cars it would also help the enviroment as new cars are more efficent fuel wise and roads would be safer as less dodgy near m.o.t failures on the road even if they dropped the price so they only made a tenner profit per car at least it’s a profit better than nothing also all these new cars sitting around rusting for a few years who would want to buy one of them in 2011 not me

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