Companies That Could Close Due to Economic Crisis: Chrysler

Yahoo lists Chrysler as one of the companies that could shut down due to ripples from the global economic crisis, as Circuit City and Linens ‘N’ Things already have.

According to numbers from Moody’s Investors Service, bond defaults could lead to “25 significant bankruptcies per month.”

Yahoo developed a list of 15 companies it thinks may not be able to survive this year’s economic downturn, companies in areas that are affected by the crisis, have not put away much cash, and have high debt and interest payments due this year. One of them is Chrysler. Moody’s rates Chrysler and the other 14 companies as very high credit risks for lenders.

Yahoo points to Chrysler CEO Bob Nardelli’s protestations that Chrysler is in fine shape as evidence that something is awry. According to Moody’s, Chrysler has the worst prognosis of the Big Three Detroit automakers, with an automobile lineup heavy on trucks and SUVs and few small cars. Yahoo concludes, “A recent deal with Fiat seems dubious, since the Italian automaker doesn’t have to pony up any money, and Chrysler desperately needs cash. The company is quickly burning through $4 billion in government bailout money, and with car sales down 40 percent from recent peaks, Chrysler may be the weakling that can’t cut it in tough times.”

Moody’s also looks down on the prospects of Dollar Thrifty Rental Cars, which has a heavy Chrysler fleet (80%) and could be in dire straights after a Chrysler bankruptcy. Dollar relies more on leisure travelers than Avis and Hertz, which also hurts it in a bad economy where not as many people are traveling for vacations.

1 User Responded in " Companies That Could Close Due to Economic Crisis: Chrysler "

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Susan Kishner said,  

Nice writing style. I look forward to reading more in the future.

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