How Can Ford Survive? And Other Auto Questions: How Can Ford Survive? And Other Auto Qui
The toll of the 1980 recession on the countryÛªs vulnerable auto companies is being spelled out this week in their staggering financial losses reported for the three months ending Sept. 30.</br></br>Ford Motor Co., Chrysler Corp., and General Motors Corp. performed a version of ÛÏcan you top this,Û showing combined losses of $1.7 billion for the third quarter and bringing their losses this year thus far to $3.6 billion.</br></br>An obvious question is, how can a firm such as Ford suffer a loss of $595 million in just three months and still be in business? How can any firm survive such steep losses?</br></br>Using Ford as an example, the answer is that its losses, although huge, have not yet reached a critical point, said David Healy, a Wall Street ana- lyst of the auto industry. The banks it borrows from, the suppliers that make its car components, and its investors still believe that FordÛªs sales will pick up this fall, beginning a gradual recovery. ÛÏI donÛªt think they could keep it up much longer, though,Û said Healy, who is with the firm Drexel Burnham Lambert.</br></br>ANSWER: Ford was wracked by a three-way whiplash in the third quarter: Its sales were badly hurt by this yearÛªs recession and the consumerÛªs rejection of its large cars, and to meet stiff import competition it has had to make unprecedented investments to change over its manufacturing plants to produce smaller carsÛÓin a hurry.