GM and Chrysler are both on track to run out of cash before the end of 2009 if a merger or major government intervention doesn’t occur, analysts tell the Wall Street Journal. With credit markets choked and rapidly diminishing reserves, experts say bankruptcy, which would carry massive consequences for the industry and economy as a whole, could be unavoidable.
Both companies would fight filing for bankruptcy because it would undermine consumer confidence in their products, with car buyers afraid their vehicles might not have manufacturer support down the road. It would also have a disastrous effect on local car dealers and other automakers that depend on their parts. GM and Chrysler have floated at least three plans to gain a federal cash infusion for a combined company, the Journal says, and are also considering a merger that would involve a third company.