LyrArc Article Gist
With auto sales collapsing, initially for trucks and large vehicles in the face of gas prices at $4-5 per gallon, and the shift to fuel efficient small cars that the Detroit automakers failed to have in their product lineup, and in October 2008 with the credit crisis choking off credit to even credit worthy customers, GM is running out of cash for operations. The aftermath of the Lehman bankruptcy is to choke off credit to car buyers and to practically all companies. Sales declined 45% for GM in October over the prior year October. GM reported that it burned through $6.9 billion in cash in third quarter 2008, and ended the period with just $16.2 billion in cash reserves. Today GM made a honest assessment, saying "it will fall significantly short" of the cash needed to run its business in the first half of 2009. "GM's estimated liquidity during the remainder of 2008 will approach the minimal level necesssary to operate its business." Ford Motor said it burned through $7.7 billion in cash in the third quarter, leaving it with $18.9 billion at the end of Septemer, as its sales in October declined by over 30%. Ford's automotive business lost $2.7 billion in the third quarter.