The US unemployment rate in September was 6.1%. The consensus estimates are that the numbers will rise, but there are differences over how much. The Bloomberg News survey of economists gives an average prediction of a loss of another 200,000 jobs in October. That would be the largest erosion in five years and would take unemployment to 6.3%
Several analysts have more pessimistic forecasts of an increase of 250,000 people out of work compared with September, putting the jobless rate at 6.8%.
GM (GM) may not get the $10 billion it needs to buy Chrysler, but, even if the Fed comes up with the money, the UAW may try to block the deal. A long strike against the companies in the current economic environment could run the union and both car firms over a cliff. The UAW and the workers it represents have lost so much over the last decade that they may not care. They will get the hell beaten out of them if the two companies combine or if Chrysler auctions itself off in pieces.
Some estimates are the GM will cut 60,000 jobs as part of a business combination.
American car companies hoped the day would never come. Data from October is expected to show the market shares of Toyota (TM) and Honda (HMC) for US vehicle sales is expected to be over 30%.
GM’s share is only expected to be 21%, so it may lose first place in its home market to Toyota for the first time, ever.
While the auto sales environment may not get much worse, American car companies may not have the capital for product development, marketing, and auto financing to allow them to get share back when conditions improve. Toyota and Honda have balance sheets and cost structures which will allow them to get though the crisis without ruining their ability to compete in future years.
Word is starting to get around town that Citigroup (C) has some more trouble coming and it could show up as soon as the next quarter. In this case, Citi’s problems may not be isolated to the big bank.
Layoffs, falling housing prices, and lack of access to credit are driving credit car defaults through the roof. There was some evidence of how serious this is becoming in the America Express (AXP) results for the third quarter.
Because Chrysler is now a private company, no one outside the corporation and its investors has a precise picture of its finances. Through the first nine months of this year, Chrysler sold 1.18 million vehicles in the U.S. — 395,304 less than the same period last year.
Having laid of tens of thousands of people and having closed some of its largest plants, the auto firm has probably reached the point where it has very few more costs to cut.
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