If push comes to shove, what would consumers make of an automaker that is bankrupt but still operating? It’s an uncomfortable question. Automaker executives such as GM’s Rick Wagoner believe it would worsen prospects as consumers’ confidence in the company erodes. But some lawmakers in Washington believe it might be necessary, if severe, medicine that might allows a failing automaker to truly tackle structural problems.
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A survey undertaken by Morpace backs the Wagoner view.
The Morpace study compared consumers’ likelihood of purchasing a new vehicle from one of the Big Three with their likelihood to do the same if the companies were to go into bankruptcy. Twenty-one percent say they are currently “very likely” to buy a vehicle from Chrysler, Ford, or General Motors. If the company of interest were to go bankrupt, only 10 percent say they would be “very likely” to purchase.
David Myhrer, Vice President of the Morpace Automotive Brand Strategy Practice, said the study shows that consumers who are currently likely to purchase a new vehicle from one of the Big Three are only half as likely to do so if the company goes bankrupt. Such an additional drop in demand would create further financial stress for the already cash-strapped companies.
“Declaring bankruptcy could significantly reduce sales and make their cash flow problem even worse,” said Myhrer.
The Morpace Omnibus study completed 1,016 interviews using an Internet panel of adults aged 18 and older. The sample reflects the demographic profile of the U.S. population.
