A leading US brokerage has increased its fourth quarter loss estimates for General Motors and Ford in light of “a fundamentally altered credit environment”.
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JP Morgan Secutities said simultaneous weakness in North America and Europe, including a potential 15% fall in western European auto sales in 2009, would make 2009 difficult, according to Reuters.
“General Motors and Ford are both likely to survive, but we now see a higher ’09 cash burn rate,” the brokerage said.
Reports this week have highlighted growing analyst concern at the Detroit automakers’ cash burn estimated at US$1bn a month, despite strenuous efforts by Ford and GM to reduce costs.
The brokerage increased GM’s 2008 loss estimate to $21 a share from $20.25 a share, and the 2009 loss estimate to $16.25 a share from $11 a share, the report said. Ford’s loss was seen widening to $3.20 a share from $3 in 2008 and to $1.90 loss per share from $0.95 next year.
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By GlobalDataJP Morgan also reduced its earnings estimates on US auto parts suppliers and downgraded four companies in its coverage, noting that double-digit production declines on both sides of the Atlantic next year may result in considerable balance sheet stress, Reuters added.
