Automakers Need a Bailout
Bewildering, though, is this odd declaration:
Though some experts believe that only the tough love of bankruptcy will provide the impetus for true change, others worry bankruptcy would be fatal to a car company.
Unlike other companies, such as airlines, that can emerge from bankruptcy leaner and stronger, auto manufacturers depend on consumer confidence that the company will be around for the life of the car to provide service and honor the warranty.
Ah, yes. That sterling consumer confidence in Ford, GM, and Chrysler.
That's like arguing that Richard Nixon's reputation might be damaged by lackluster sales of his memoirs after he resigned in disgrace.
Their reputation is in the toilet, fellas. Consumer confidence is nonexistent. And has been for years. It can't get worse.
Besides, there comes a time when bankruptcy becomes a "healthy" way for a company - or an individual - to restructure debt. Yeah, it comes with baggage. But we're talking about Chapter 11 here (at least today). That's not the end of the world. Potentially, it's a beginning. Ask Kmart. Ask Texaco.
In my opinion, if GM were to declare bankruptcy, its image might actually be enhanced. A message would be sent that it is no longer business-as-usual. Contracts - especially with the UAW - would be abrogated, with the Statement of Cash Flows improving dramatically as a result.
And cash, being king, might allow for more consumer-friendly automobiles to be released to market. Who knows? GM and the others might actually once again have reputations.
Guess we'll see ...