Ford put at a cashflow disadvantage from GM and Chrysler bankruptcies

Ford was the only Motown manufacturer with enough fiscal health to avoid bankruptcy this past spring, and that has put them at a competitive disadvantage, according to CEO Alan Mulally, though he also told reporters at the 2010 Washington Auto Show that the benefit derived from Ford avoiding the aid taken by GM and Chrysler is far greater than any disadvantages.

As a result of the protections and benefits available under the shelter of bankruptcy, GM and Chrysler were able to rework the liabilities side of their balance sheets and as a result, were able to drop their costs. GMAC also received money from the administration so that they may lend to to GM and Chrysler consumers and dealers alike.

Chrysler emerged from bankruptcy debt-free, and GM owed $8.1 billion, which it intends to have paid back by June. Ford on the other hand, was holding $26.9 billion in debt at the end of the third quarter, and incurred a $214 million expense by way of the interest owed on that money.

While Ford is paying back their loans, Mulally pointed out that against GM and Chrysler, Ford is “at a little bit of a disadvantage on the cash side.” Mulally mentioned that as Ford”s cash flow improved they plan to more aggressively work towards improving their balance sheet.

-By: Stephen Calogera

Source: freep.com


Chris Chin

Chris Chin is the Editor-In-Chief of egmCarTech and is a regular contributor to Automobile Magazine.

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