GM, Chrysler Bankruptcies Have Beneficiaries, Report Says
April 13, 2009
LONDON -- It's not all doom and gloom if General Motors and Chrysler go bankrupt, a new report says. In fact, some automakers will benefit from their bankruptcy.
GM and Chrysler competitors could gain pre-tax profit of more than $24 billion if the companies are forced to dramatically downsize after some kind of bankruptcy, says a report from Bernstein Research in London and reported on by the Detroit News.
In the U.S., Ford would benefit most with GM and Chrysler customers deflecting to its brand. Ford would be followed by the Japanese automakers and Germany's Volkswagen.
In Europe, if GM's Opel and Vauxhall subsidiaries were forced into liquidation, Renault and its affiliate Nissan followed by Ford of Europe, Volkswagen and French automaker Peugeot-Citroen would be the big gainers, the report says.
Bernstein Research's Max Warburton said that while GM and Chrysler buyers are most likely to defect to Ford followed by the Japanese and then European cars, it varies by product and segment. The greatest opportunity for the Japanese is in minivans and small SUVS, he said, and for the Europeans in midsize sedans. There will be few benefits for BMW and Mercedes.
GM has been a deflationary force on pricing in the U.S. and Europe for years as it has resorted to aggressive pricing instead of reducing manufacturing capacity, product offerings and dealer density. "GM has been the leading exponent of oversupply, cheap financing and deflationary strategies," Warburton told the Detroit News.
He acknowledged bankruptcy would initially be disruptive but "benefits would accrue to those left standing."
The report assumes Fiat's proposed alliance with Chrysler will fail and some Chrysler operations, notably minivans, will be integrated into GM. It also assumes GM will close Saturn and Pontiac, and it will exit parts of its Chevrolet small car business and parts of Chevrolet and GMC truck operartions.
Posted by Michelle Krebs at 9:19 AM under Analysis , Chrysler , Companies , Ford , GM | Comments (1) | digg this | Seed Newsvine
That's a lot of assumptions. The way I see it, if the Fiat-Chrysler deal fails, GM would pick up the bulk of the slack, long term. My gut feeling says today's Chrysler LLC customer will go up the street to the Chevrolet or P-B-C-GMC store rather than Toyota or Nissan. Maybe Hyundai.
GM'S warranties are backed by Uncle Sam, good product in the pipeline and the onset of brand streamlining. Short term could be messy, but I think people will get over their fear of the "B"word. They flew millions of miles at 39,000 ft in bankrupt Northwest Airlines jets.
Posted by: fulcrumb | April 13, 2009 at 8:54 PM