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Automakers Still On Life Support And Barely Avoiding Bankruptcy

Posted By admin || 27-Jan-2009

Although Chrysler has taken out over $4 billion in government bail out loans just to avoid bankruptcy, the Vice Chairman and President Jim Press offered "good news" about the future of the company according to an article in the Star-Telegram.

The article said:

A top Chrysler LLC executive says the automaker should be viable by springtime because of its restructuring, introduction of new and improved vehicles, and higher sales due to loosened credit and sweetened incentives for buyers.

Vice Chairman and President Jim Press defined "viable" as remaining solvent and continuing to invest in new products, with an ability in the future to repay government loans.

Simply being viable doesn't sound good for a company on the brink of bankruptcy and cutting thousands of jobs just to stay afloat even with a taxpayer funded bail out. Didn't Lehman Brothers say something similar before they went bankrupt? Chrysler who's struggling to avoid bankruptcy also claims that "...employee pricing, plus an incentive, plus low-interest loans" will help sell more vehicles and save it from bankruptcy.

This company just experienced job losses . Is it realistic to expect the remaining employees to spend their paychecks buying cars from their employers who are facing bankruptcy? I'm not sure if this nearly bankrupt company is viable or has used the bail out money in a productive way because of course we haven't heard any "hard numbers" and results, yet. I guess we will need to wait and see.

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