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GM, Ford loss to hit US $1.6 B with slumping SUV, truck demand
June 2008 |
General Motors Corp. and Ford Motor Co. will lose a combined US $1.6 billion ($1.62 billion CDN) during the next 18 months due to plummeting sport utility vehicle and pickup truck values, according to auto industry analyst Himanshu Patel of JPMorgan.
High gasoline prices have caused pickup and SUV values to tumble during the past year. Patel said they dropped 16 per cent to 18 per cent from May 2007 to May 2008.
Ford will have $1 billion ($1.01 billion CDN) in lease depreciation costs, and GM will have $600 million ($609 million CDN) because it shares risk with its GMAC financial arm, Patel predicted.
He wrote that the price pressure on used pickups and SUVs has been aggravated by "generally more affluent customers' ability to 'bail out' early." That further worsens the used vehicle market's supply and demand imbalance.
Source: www.manufacturing.net
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