Why would Ford motors be financially okay unless GM or Chrysler go under?

[ohhai]

because they dont actually compete

[avatar2068]

When GM and Chrysler said they would go under unless bailed out by the early part of 2009 Ford Motor Co. reps stated that they would be alright unless one of the other two went under. Would this not have the opposite effect? If Ford had one(or two) less competitors would they not do better instead of worse, or are they going with the GM version of economics where the job losses would so injure the U.S. economy that even the auto maker that stands after the others fail would not have enough customers to stay afloat?

[bostonianinmo]

Many of the auto manufacturers share common suppliers. Some of those suppliers could go bankrupt if any of the Big-3 actually fail. That could have a knock-on affect for the rest of the industry.

They also share a lot of R&D and a surprising amount of common parts. The new 6-speed automatics offered in some Fords and GMs are a shared design.

[Jerry]

In the long term, yes it would probably benefit Ford if GM or Chrysler went away. That is if Ford could survive to face the long term. There are many things that would cause Fords sells to plummet. some I've heard else where some I've just thought of and I don't know how realistic they are, but here is my list.

IF GM or Chrysler fails and this prompts the credit rating agencies to further discount fords credit rating, this makes it more expensive for ford to borrow.
If one of those companies fails, the quarter (possibly quarters)in which they're liquidated there is likely to be massive influx if discounted cars on the market. As slow as car sells have been, do you think Ford could survive a hugely discounted competitor if only for the short term?

If one of the american companies fails, it will likely indicate the others might fail, which will decrease the value of the product in the eyes of the consumer, and slowing sells even further.

By the same token, it will make it harder for consumers to get bank loans from to purchase a product that is deemed less valueable if one of the other fail.

Those 3 have assume GM or Chrysler liquidate. I think it is more likely they seek credit protection and restructuring. GM or Chrysler are not going to just go away. At the very least their assets will be sold. If GM enters bankruptcy protection, and is able to void the union contracts, and renegotiate contracts on much better terms, how does Ford compete with that?

[danrathersdrunkagain]

All three are teaming up to grub money from us.

[Keith]

Nothing is fixed until they can outsell Honda and Toyota. Bailouts and mergers are only temporary band-aids.

[wpgeezer]

When that much money is at stake, competitors are everywhere. If GM and Chrysler go under, Toyota or someone else will buy them. Ford already gave up their shares of Mazda. Ford's negotiation abilities are lacking. Even Washington doesn't want to talk to them anymore. The bailout is contingent on a feasible future plan. They aren't even trying to come up with one. Business is business. Why should the taxpayer bail out a private company with no plans to become self supporting. I have trouble believing Ford needs a bailout. A Govt handout can not make a company work. Fix the problem or give up. Let someone else make it work. Be good, get good, or quit.

[DavidC]

Because the discount they receive on parts would be slashed as the demand for such parts would be less with the loss of the other two and some part suppliers could just not stay in business which would lead to less competition and higher prices which would cause Ford to not afford to be able to build cars

[emiller1998]

They share the same suppliers in the US. If 1 goes bankrupt more suppliers will go bankrupt. No suppliers = no parts.

Toyota, Honda, Nissan, Hyundai, Mercedes, and BMW also use the same suppliers for their North American plants. It would hurt everybody including them.

[PaulinSanDiego]

I have a follow up to this question:

If the failure of GM and Chrysler would cause Ford to fail, why wouldn't it cause Toyota, Honda, VW, BMW, and all the other American made foreign car companies to go under, too?

BTW - I own a Ford and a GM, and I know exactly why these companies are in trouble. Their cars suck.