And Then There Were Two

摘要

Desperate people do desperate things, which is why the odds are that a merger between two of Detroit's Big Three carmakers, General Motors (gm) and Chrysler, will somehow be made to happen. Certainly, the choices facing both firms are stark. At their current rates of cash burn, both firms will run out of money before the end of 2009, according to Rod Lache, an analyst at Deutsche Bank, gm, which has seen its sales in America fall by 18% this year, has about $20 billion in cash, but it needs to keep back at least $11 billion as working capital. Sales at Chrysler, which is owned by Cerberus Capital Management, have fallen by 25%, but it should have about $8 billion left by the end of this year. It too needs more than half that amount to finance its continuing operations. Neither gm nor Chrysler is in any position to raise funds on commercial terms. Nor do they have assets that anyone else wants to buy.