Chrysler and GM deny bankruptcy rumors

Posted Fri Jul 11 2008 8:55 AM by Ralph Hanson

The U.S. auto industry may be in turmoil, but both Chrysler and General Motors have denied any possibility of bankruptcy and have dismissed recent rumors to that effect as inaccurate. Both companies have been plagued by falling sales as consumer demand shifts towards smaller and more fuel-efficient sedans and hatches and away from GM and Chrysler's traditional strongholds of SUVs and trucks.

In response to financial analysts, Chrysler recently sent a letter to its dealers assuring them that "the suggestion of a possible bankruptcy situation is without merit." The letter came just days after media allegations claimed the Auburn Hills carmaker was affected by liquidity problems that would deteriorate if the U.S. auto market didn't pick up soon, reports Automotive News.

Rick Wagoner, CEO of General Motors, also emphatically denied any possibility of bankruptcy. Wagoner assured reporters that GM would not be disbanding any more brands apart from Hummer and that it was capable of dealing with the current market conditions by upping passenger car production in lieu of truck production.

Despite the denial from Wagoner, stock prices for GM fell to a 50-year low as investors seemingly took heed of warnings issued by Merrill Lynch that bankruptcy was "not impossible" for GM.

Reader Comments

Fri Jul 11 2008 9:32 AM
burke says

GM and Chrysler may still be fighting for their lives, but that H2 is doomed without remedy...

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