Plunging vehicle sales put future of Ford in doubt...USA..

America's biggest motor
manufacturers, General Motors and Ford, were battling a meltdown in
confidence on Wall Street tonight as plunging vehicle sales cast doubt
on their ability to survive the global financial crisis.Alarmed
that the Detroit-based motor manufacturing empires could be forced into
bankruptcy, investors dumped stock in their droves. GM's shares dived
by 16% while Ford's stock dropped by 10% to levels last seen in the
1950s.Together with privately owned Chrysler, the two
manufacturers make up Detroit's "big three" car companies. They have
been struggling to cope with a shift in tastes among US motorists
towards smaller, more fuel effective vehicles.A slowdown in
consumer spending has compounded a cash crisis and even those who want
to buy new cars are struggling to get financing from reluctant
high-street banks.The US government has promised $25bn of loan
guarantees to help the motor manufacturers stay on a firm financial
footing. But experts are becoming increasingly concerned that this may
not be enough."These fears are justified," said George Magliano,
a motor industry analyst at Global Insight in New York. "Will they
survive? Yes, I think so. But it's going to be a tough fight."Global Insight expects sales of light vehicles in the US to fall from 16.1m to 13.6m this year, then to 13.4m in 2009.A
report by Citigroup this week suggested that if conditions deteriorate
further, Ford and GM could be forced into "drastic spending cuts"
including swingeing job cuts and new pay deals with unions - or even
debt-for-equity exchanges in which the banks would take ownership of
part of the two companies."Already weak balance sheet positions
will find it difficult to accommodate a prolonged global downturn,"
said Citigroup's analyst, Itay Michaeli. "The risk-reward balance has
tilted decidedly negative."General Motors plunged $38bn into the
red last year, while Ford lost $2.7bn. In a recently recorded YouTube
video appealing for support, GM's chief executive, Rick Wagoner,
insisted that the company had a "bright future" but was going through a
rocky patch."We do have to do some tough things to get through today's challenging environment," said Wagoner.At
today's share prices, GM was worth just over $3bn, less than its
capitalisation at the start of the Great Depression in 1929, and Ford
was valued at just over $5bn - paltry sums for two companies which sell
$353bn worth of vehicles annually.Competition from Asian
manufacturers has severely weakened the US firms, with Japanese
companies proving more adept at making smaller cars, rather than trucks
and sports utility vehicles. Toyota recently stole GM's crown as the
world's most prolific manufacturer of vehicles.In Detroit, the
companies' troubles have been greeted with gloom. Gerald Meyers, a
University of Michigan business professor, told the Detroit News that
morale was plummeting: "It's like finding out that you have a terminal
disease. You try to do something about it, but you know and everyone
around you knows that you are in deep trouble."Ford and GM have
been offering bargain-basement prices on cars. In a bid to save money,
GM recently ended its 11-year run as a key sponsor of the Oscars in
Hollywood. The company is trying to sell several of its brands
including the gas-guzzling Hummer marque which makes vehicles modelled
on the Humvee armoured car used by the US army.Since 2006,
Detroit's three major manufacturers have cut more than 100,000 jobs,
hitting hard in the so-called "rust belt" of manufacturing across
Michigan, Indiana and Ohio in America's midwest.Ford mortgaged
most of its assets to raise money, including its blue oval logo known
around the world. GM has suspended dividend payments to shareholders
for the first time since 1922 and has axed bonuses for its senior
executives.



Not looking good over there is it .