The Auto Industry, "Boom and Bust, Without the Boom"
The study claims the problems are far from being over for the automotive industry, as week sales and the difficulties faced by manufacturers in their production processes will cause repetitive bankruptcies.
"A number of suppliers have emerged from bankruptcy with untested business models and capital structures, which have and may result in double-dip bankruptcies," the Fitch study said, according to Autonews. "The manufacturers could also fall into the same pattern."
Things may get even tougher for American taxpayers. So far, Fitch calculates the US pored $125 billion in the auto industry and expects more money to be needed in bringing the industry afloat.
Even more, both GM and Chrysler will not be able to access the equity markets in 2010 due to their bankruptcies this year.
As for Ford, the single Detroit Three carmaker to have made it through 2009 without government bailout, things may look a bit more brighter.
"Ford is best positioned from a production and product standpoint to further strengthen its balance sheet," Fitch says.
As for the praised CARS program, Fitch believes all it managed to do was to delay the bankruptcy of several other suppliers. From the sales standpoint, its effects will be insignificant in for the 2009 overall picture. Its only merit is to have rid the streets of aging vehicles.