By: Julia Aidan
Submitted: 2008-12-05 14:09:26 | Word Count: 514
It’s not looking too good for America. World economy has more or less hurtled into a kind of slowdown. Put more clearly, few countries have already been sucked by recession. Greater cases of bankruptcy are coming to the fore. Liquidation and restructuring have become a norm. The credit crunch or near insolvency has tightened its noose around various organizations which were doing well apparently (more because world economy was oversubscribed). In the light of this downswing, a lot of slime is coming to the surface. US automotive industry, for example, is in deep pits. The three top car manufacturers namely Ford, GM, and Daimler Chrysler have already proposed a bail-out. Thankfully, they might be funded by the new democratic set-up as they have been out and out Obama loyalists.
The top three companies have nearly lost their entire share holding, once they boasted of huge market capitalization, today they run into deficits which require an urgent bailout or there is simply no scope of revival. The tide had taken shape about two years ago but now with rocketing fuel prices and global uncertainty on diesel, people are opting for small cars rather than the huge SUV’s and trucks that Ford, Chrysler, and GM had been making largely. General Motors were less into manufacturing and more into car financing.
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With the taps running dry for these three, liquidation (a form of bankruptcy) could result in shutters. This will have a two-fold effect. Firstly, a horde of employees would lose job and secondly consumers would be bitten with serious lack of options. Further, the associated automotive industry will also not be able to revive with the fall of these three huge pillars. Imagine, the car accessory industry; the performance industries, exhausts, inter-coolants, buffers, and so on.
The companies might be helped with restructuring (second form of bankruptcy). In the proposed case, Chrysler, Ford, and GM can cut down on health benefits given to employees (only these run in billions) and get away from the Auto Workers Association, the union asks for a lot of employment benefits which adds to enormous hidden costs. Foreign manufacturers with plants in US are doing well because they keep away from the United Auto Workers.
Not only this, even the Used Cars industry is suffering reverses. Initially, American banks had been pro-active in offering finance. (A lack of thought has already resulted in Sub-Prime crisis). Suddenly with recession looming large, the Used Car financing has also been halted by the banks. In the absence of financial institutions and banks offering loans to buyers, they have no way to get into the Used Cars purchase.
Earlier, online car classifieds were doing exceedingly well with various schemes floated by dealers of Used Cars. GM itself pumped a lot of money in car financing business. All that and much more had suitably lifted the used car euphoria. For instance, Florida suddenly started trading in Used Cars in almost every nook. This included even the Miami Beach area.
Author Resource:-
For more information on Car classifieds log on to autoimperia.com
