After learning a lesson from the economic slump during the Great Recession, Detroit automakers General Motors and Chrysler have enough cash on hand to make it through the year without a government bailout or bankruptcy, according to CNBC.
Airlines who were hit hard by the coronavirus pandemic got $25 billion in bailouts from the U.S. government. Automakers, on the other hand, had enough money to weather the storm.
GM, Ford and Chrysler have tapped credit lines for roughly $45 billion to keep them afloat without stimulus relief for at least a few quarters.
“The automakers themselves are in quite a bit different shape. They learned the lesson the hard way of - we need to improve of balance sheet,” Mark Wakefield, a managing director at AlixPartners, which helped GM restructure its bankruptcy.
Most car factories in the United States have been closed since March. The majority of car dealerships have also remained shuttered or are open in a limited capacity.
At some point, U.S. automakers could push for a stimulus package to generate consumer activity, such as the 2009 "Cash for Clunkers" program, which allowed owners to trade in used cars for up to $4,500 toward a new vehicle.
Stephen Brown, a senior director at Fitch Ratings, monitors GM and Ford.
“Both companies entered this downturn in a significantly stronger financial position, I mean a much stronger financial position, than what we saw going into the last downturn,” Brown said.
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