The American auto industry is barely standing on its legs. Both biggest American car makers, Ford and GM are having big troubles keeping their money in their wallets.
Ford announced that in quarter 3 of 2008, it had lost 129 million after pre-tax of a total of $2.7 billion. Unfortunately these big losses will likely lead to a forecasted 10% cut in salaried workforce along with no executive bonuses or merit pay. With about $18.7 billion cash on hand and a $7.7 billion burn rate in 3Q it's no surprise that Ford is holding its hand out for the federal government to help tide the business over until things are back the way they were. But hey, the new Mustang could fix things up! And looking at the bright side, that is better than last year, where Ford lost $380 million.
On the other hand, GM is having bad times nowadays. General Motors just released earnings report for the same time period as Ford. And it's really bad. GM burned out $2.5 billion after pre-tax of a total of $6.9 billion. Like Ford, this is better than GM's losses of last year, where they lost $42.5 billion. However, this doesn't mean they're safe. GM is also having job-cuts and big changes. Such as deferring capacity expansion projects, lower sales promotion pending, i.e. less advertising, less support of dealer network activities and channel consolidations and even increase reduction in force from 20 to 30%. The biggest news out of this report, is that GM has stopped merger talks with Chrysler for the time being! So GM will focus on its own problems right now.
GM and Ford are looking into government aid to help them survive. So now it's in President Ombama's hand. We all hope he can help them.