Big Trouble for Big Three Automakers

Shares of General Motors Are Trading at Prices Last Seen in the 1950s

By MARK TRUMBULL

July 5, 2008

America's automobile industry may be facing the biggest turnaround challenge in its history, a problem punctuated Tuesday as the carmakers released monthly sales results.

General Motors sales consultant Mike Bechtolt hangs a banner in front of the GM.

Times were tough enough in Detroit before gasoline hit $4 per gallon, but in the past two months the outlook has taken a turn for the worse.

Shares of General Motors are trading at prices last seen in the 1950s, their value cut in half in just eight weeks. Ford and Chrysler are in even worse shape, analysts say.

The sobering implication: The Big Three may have to become the Big Two, and even survivors will have a tough road ahead.

Bankruptcy is not a near-term threat, but the three carmakers are fast burning through cash reserves. And while government assistance – or perhaps an energy policy that supports new automotive technologies – could become a lifeline, it can't substitute for the hard work of transforming product lines.

Source: http://abcnews.go.com/Business/PainAtThePump/story?id=5288234&page=1

Contributed By:

Prof. P. Guha

(Globsyn Business School)