Chrysler status shaky, analyst says
04.07.2008 10:01
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- Source: toledoblade.com
DETROIT - Faced with soaring gas prices, a sputtering economy, and rapid U.S. market shift away from trucks, the U.S. auto industry's weakest player, Chrysler, may have to seek bankruptcy or sell its Jeep and Dodge Ram brands as early as next year, JPMorgan said yesterday. But rivals GM and Ford are likely to get through the rough patch and turn a profit in 2010. JPMorgan auto analyst Himanshu Patel dismissed the possibility of an imminent bankruptcy at GM, saying in a conference call with investors and media that such fears "are completely overblown." The day before, GM shares slid to a 54-year low after Merrill Lynch auto analyst John Murphy wrote in a note to investors that a GM bankruptcy "is not impossible if the market continues to deteriorate and significant incremental capital is not raised." Mr. Patel said the situation at Chrysler LLC is far more perilous because it has limited assets to raise cash and is more heavily reliant on trucks and the North American market. Chrysler sales fell 22 percent the first half of this year. Chrysler has had to release little financial data since private-equity firm Cerberus Capital Management LP bought it last year, but Mr. Patel estimates Chrysler will burn through $4 billion this year and could be forced into bankruptcy or sell off its parts in the late 2009 if industry conditions don't improve. Mr. Patel said it's difficult to predict a likely outcome for Chrysler, but South Korean or Chinese automakers covet Chrysler's U.S. distribution network. A bankruptcy filing could be a hit to Cerberus, which invested $6.1 billion in Chrysler as part of its acquisition and backed a $500 million line of credit that Chrysler tapped last month. "These are untested waters," Mr. Patel said.
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