Down Economy Tests Carmakers’ Commitment to Hybrids
page 2 of 2
Unfortunately, cash is running low for the domestic automakers. General Motors announced a $15.5 billion loss Friday, the third-worst loss in the company’s history, several times larger than analysts had projected. GM stock finished down 84 cents, or 7.6 percent after the announcement, which, however troubling, is still well above the stock’s 52-week low. The good news for GM investors is that the majority of the losses stemmed from onetime charges and expenses that were essentially unavoidable. The bad news is that nobody is sure how long it will be before the company reports a profit.
Though General Motors may be taking the worst of an auto market that has declined by 10 percent through July, no company has been immune. Toyota, despite being on pace to surpass GM’s 77-year reign as the world’s leading auto-seller, has lowered its global sales projection from 9.85 million to 9.5 million. Ford, which most analysts consider better positioned to lead American automakers into the small car era, announced an $8.7 billion loss weeks ago.
Nobody knows how far and how quickly gas prices will rise and fall. The best economists can’t predict when the economy might turn around. But until it does, carmakers with a long-term commitment to hybrids will be best positioned to survive those ups and downs.