Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (48147)	12/24/2005 5:00:18 PM
From: ild	Read Replies (1) \| Respond to of 110194

CHICAGO (Dow Jones)--If General Motors Corp. (GM) executives start looking at bankruptcy as an increasingly viable option for the world's largest auto maker, they may want to consider the following: nearly three-quarters of Americans wouldn't buy a car from a bankrupt company. According to data released Friday by Directions Research Inc., only 26% of those polled in a recent survey said they would purchase or lease a new car from an automotive manufacturer that had declared bankruptcy. The rest said they wouldn't. GM lost nearly $5 billion in its North American automotive business in the first nine months of 2005, and speculation has mounted among investors that the auto maker may eventually be forced to file for Chapter 11 protection. Company executives have denied they consider bankruptcy an option, but the company faces a laundry list of problems that promises to keep the talk alive. U.S. auto makers are struggling to turn a profit as they lose market share to foreign auto makers with leaner cost structures. Several auto parts makers - most notably Delphi Corp. (DPHIQ), a former GM unit and its leading supplier - have been forced into bankruptcy. GM recently announced it would close 12 North American manufacturing plants as part of a plan to cut $7 billion in costs per year. Should GM's current restructuring efforts fail, bankruptcy could help get the company's cost structure in order, but it wouldn't set the auto maker back on the path to profitability if consumers won't buy the company's cars. The survey data indicate that consumer attitudes toward a bankrupt auto maker would differ significantly from those toward airlines that have filed for Chapter 11. Several large airline companies, such as UAL Corp. (UALAQ) and Northwest Airlines Corp. (NWAC), are operating under bankruptcy protection and continue to have passenger traffic numbers similar to those at carriers that aren't bankrupt. The report from Directions Research didn't specify the factors that would play into a consumer's decision to not purchase a car from a bankrupt auto maker. The data do, however, show that more-affluent people would be more willing to make such a purchase. While just 20% of those earning under $25,000 per year would buy or lease a car from a bankrupt company, 32% of those earning more than $100, 000 would do so. The nationwide survey by the Cincinnati-based research firm polled 1063 randomly selected adults during the three weeks ending on Dec. 14. Directions Research said the independent survey wasn't done at the request of a client nor paid for by an interest group. Among other findings, 28% of those surveyed said they would consider purchasing a car from a Chinese company if it started selling in the U.S. Only 15% of respondents said they would purchase a car from an Indian company. When asked whether gas prices influence the amount of driving they do, 62% said "yes," according to the research firm. As would be expected, there was a wide gap depending on how much the respondent earned, with 71% of those earning less than $25,000 a year saying gas prices influence the amount of driving they do and only 49% of those earning above $100,000 saying it influences their decision. Overall, only 39% of those surveyed said gas prices will be a primary factor in deciding what kind of vehicle to purchase next. Fuel prices soared to record levels over the summer months this year, helping lead to a sharp decline in sales of light trucks and SUVs. Though Detroit's main auto makers remain committed to the highly profitable large vehicles, companies such as GM and Ford Motor Co. (F) have started placing considerably more emphasis on developing fuel-efficient vehicles. The survey also found that 35% of respondents consider automobile brands originated in the U.S. to have the highest quality. Japan was second, selected by 31% of those surveyed, and Germany was third at 24%.