Consumers Won't Buy From Bankrupt Car Maker

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Old 12-27-2005, 11:08 AM
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Consumers Won't Buy From Bankrupt Car Maker

Consumers Won't Buy From Bankrupt Car Maker - - AP - - Source: biz.yahoo.com

CHICAGO (AP) -- Nearly three-quarters of Americans wouldn't buy a car from a bankrupt company, according to a recent survey.

In a nationwide survey by the Cincinnati-based research firm Directions Research Inc. published Friday, only 26 percent of respondents said they would purchase or lease a new car from a manufacturer that had declared bankruptcy.

General Motors Corp. lost nearly $5 billion in its North American automotive business in the first nine months of 2005, and speculation has mounted among investors that the auto maker may eventually be forced to file for Chapter 11 protection.

GM recently announced it would close 12 North American manufacturing plants as part of a plan to cut $7 billion in costs per year.

Company executives have denied they consider bankruptcy an option. They have noted that buying a car is a long-term commitment, and buyers will be put off if the manufacturer is bankrupt or considering bankruptcy.

The survey data indicate that consumer attitudes toward a bankrupt auto maker would differ significantly from those toward airlines that have filed for Chapter 11.

Several large airline companies, such as UAL Corp. and Northwest Airlines Corp., are in bankruptcy and continue to have passenger numbers similar to carriers that aren't bankrupt.

The survey polled 1063 randomly selected adults during the three weeks ending on Dec. 14. The results had a margin of error of plus or minus three percentage points.

Directions Research said the survey wasn't done at the request of a client nor paid for by an interest group.

Among other findings, 28 percent of those surveyed said they would consider purchasing a car from a Chinese company if it started selling in the United States.

Only 15 percent of respondents said they would purchase a car from an Indian company.
Old 12-27-2005, 12:17 PM
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Well, duh. Buying a ticket from an airline is a one time use item. Most people look at cars to last a bit longer afaik .
Old 12-27-2005, 12:48 PM
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I still think Bankruptcy would be the best thing for gm to get back on track!
Old 12-27-2005, 01:49 PM
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Most people don't understand what bankruptcy implies. They assume that bankruptcy means that GM will close up shop, shutdown, dishonor warranties, etc.

I'm absolutely certain that if they declared bankruptcy the company would reorganize and continue to operate. Shareholders would be hung out to dry and labor agreements would be open to renegotiation but the company would continue to exist. I can't imagine that any bankruptcy court judge would actually force the liquidation of GM's assets.
Old 12-27-2005, 01:53 PM
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The reason people feel that way is because they do not understand what Chapter 11 is. There are many forms of bankfupty and I am sure, GM, if it'd enter one, it'd be Chap. 11. In the case of Chapter 11, for a company like GM (just like with United Airlines and other companies with similar issues), Chapter 11 means, let me get into a legal business state that would allow for quick resolution on union-related and other similar issues, which I cannot legaly solve swiftly enough in the current state. Then, I will get out of Chap. 11 (hopefully) healthier and stronger.

Chapter 11 would be good for GM's issues, but the market (due to it perception of bankrupty) would punish them in possibly an unrecoverable manner.
Old 12-27-2005, 02:07 PM
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Well if I were GM and Ford, I would work with the US Gov't ala Chrysler in the 1980s. I would try and convince the US Gov't to try and help increase spending for development on alternative fuel vehicles for the Big 3 only. The Gov't and the Big 3 should work together to increase fuel economy and implement fuel savings technology. With gasoline prices today, fuel economy is becoming an ever increasing factor in the automobile purchasing decisions.

I personally don't think GM will file for bankruptcy.
Old 12-27-2005, 03:54 PM
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The Federal government is not going to help General Motors.
Old 12-27-2005, 07:01 PM
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Originally Posted by Maximized
Well if I were GM and Ford, I would work with the US Gov't ala Chrysler in the 1980s. I would try and convince the US Gov't to try and help increase spending for development on alternative fuel vehicles for the Big 3 only. The Gov't and the Big 3 should work together to increase fuel economy and implement fuel savings technology. With gasoline prices today, fuel economy is becoming an ever increasing factor in the automobile purchasing decisions.

I personally don't think GM will file for bankruptcy.
Poor gas milage is not anywhere the top of the list for the troubles of GM.
Old 12-27-2005, 09:17 PM
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By the way, we have got to stop saying/writing "Big 3". There is no more Big 3, there are two left and one is not that big any more.
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