March 10, 2006

GM and Ford face unprecedented challenges, analyst says

New York, New York – Investment research and credit rating firm Standard & Poor’s says that General Motors and Ford will face “unprecedented financial and operational challenges in 2006 as they fight to turn around their ailing performance in the critical North American market.” The conclusion is part of a recently-published report, “GM and Ford Need Traction on North American Turnaround in 2006”.

The two automakers face excess capacity, high legacy costs and changing customer preferences as they did in 2005; they will also need to prepare for bargaining with the United Auto Workers union, whose labour contract ends in 2007. Standard & Poor’s says that if the companies “cannot reverse the negative trends that have buffeted them, General Motors could ultimately have to restructure its debt and contractual obligations, while a somewhat healthier Ford could suffer from the price actions of its competitors.”

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