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General Motors Bankruptcy May Be Beneficial To Auto Sales

Posted By admin || 26-May-2009

According to an article in the Dallas Morning News, a General Motors (GM) bankruptcy may be exactly what the struggling automaker needs to boost sales.

The article said:

Car and truck buyers, they say, may not be as fearful of Chapter 11 as once thought, as evidenced by Chrysler LLC's stronger-than-expected sales in the two weeks after it took the dreaded step into court. Many potential buyers seem more affected by the level of uncertainty surrounding the nearly bankrupt automaker's fate than the prospect of them actually filing Chapter 11 bankruptcy, according to the article.  I might also add that many consumers are concerned that they will purchase a GM vehicle and if the automaker files bankruptcy they won't honor warranties.

As evidence of this fact, sales at both GM and Chrysler increased once the government announced that they would back GM and Chrysler warranties, protecting consumers during any Chapter 11 bankruptcy filed by the automakers. Of course filing Chapter 11 bankruptcy will give GM the power to discharge or modify creditor and employee agreements that may be draining the company of cash.  Both personal and business bankruptcy are similar when it comes to discharging debt and allowing the debtor to start fresh.

Categories: Chapter 11 Bankruptcy
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