What has the pundits predicting so doom and gloom? They point to the fact that investors of the Detroit Three are fearful that they may run out of cash before the end of next year. General Motors and Chrysler are going through a lot of cash quickly as slow auto sales take larger and larger chunks from their meager profits.
Analysts don’t expect GM to run out of money this year but say that the company will have to raise as much as $10 billion during the next 12 months to end speculation that bankruptcy could come in 2009.
Ford currently has $40.6 billion in cash as well as available credit. Some pundits say that with its cash on hand and the bait of Volvo, Ford is in better shape to survive the bankruptcy storm better than the other two car manufacturers.
And what about Chrysler? Well, we all know that they are owned by Cerberus, a private equity company. Many pundits think that this company is most likely to seek bankruptcy protection as a tool for a rebound. How? Since Cerberus doesn’t have to worry about shareholders, it could claim bankruptcy for Chrysler and use it for a program to create a new company.