Moving violation

7 November 2008 By Antony Currie Follow @AntonyMCurrie

Ford s and General Motors results show just how dire their situation is. Government cash will just prolong their pain. The only support the US should offer is for a wellplanned restructuring under the cover of bankruptcy. But with GM on the brink time is running short.

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Ford and General Motors released thirdquarter results on Friday.

Ford reported a net loss of $129m. Excluding special items – including a gain of $2.3bn related to shifting healthcare costs into an independent trust – the pretax loss was $2.7bn. Ford also burned through $7.7bn in cash, almost half of which was related to curtailing production of its large trucks and SUVs.

Ford now has $18.9bn in cash, as well as $10.3bn of undrawn credit lines.

General Motors reported a net loss of $2.5bn. Excluding gains from a number of special items, including healthcare, GM's net loss was $4.2bn.

GM burned through $6.9bn of cash in the quarter. It also made payments of $1.2bn related to Delphi's bankruptcy proceedings. After drawing the remaining $3.5bn of its revolving credit line GM ended the quarter with $16.2bn in cash.

Toyota announced secondquarter results on Thursday. The Japanese carmaker's earnings dropped 47% in the first half of the year, and executives warned profits for the year would hit a 13year low.

Separately, Reuters reported that Chrysler is also burning through cash and may consider a breakup if government support is not forthcoming to finance a merger with GM.

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