Toyota (TM) wants GM (GM) to go out of business. Then the Japanese car company could take the No.1 market share position in America, perhaps over 25%, and make a fortune when the consumer gets back his appetite for spending.
All of that does make sense until analysts start to look inside the industry and see how the supply chain works. If GM falls, so do many of its suppliers. If the suppliers fail, Toyota loses its sources for parts. Toyota factories in the US will have to shut down, and potential car buyers will need to keep their current vehicles or buy a horse.
According to Reuters, “A healthy U.S. auto industry is vital for a sound U.S. economy and by extension for Japanese carmakers.” That is only the tip of the iceberg and it is based on the fact that higher US unemployment will further undermine car sales. But, if the stimulus package works, the consumer’s ability to buy a new vehicle should improve.
The supply chain problem is a harder one to solve. If big part companies like Delphi go away, who replaces them? The auto components industry would have to be rebuilt almost from scratch. There is no guarantee that the federal government will save it. There is no guarantee that bankruptcy courts will allow parts firms to operating in Chapter 11. Without debtor-in-possession financing, many may simply be driven into liquidation.
If GM falls apart as a viable car company, the shock wave to the American vehicle assembly process will be devastating and there will not be a single company building vehicles in the US that will not have to shut down a large part of its production capacity, perhaps for months.
Douglas A. McIntyre
Are You Still Paying With a Debit Card?
The average American spends $17,274 on debit cards a year, and it’s a HUGE mistake. First, debit cards don’t have the same fraud protections as credit cards. Once your money is gone, it’s gone. But more importantly you can actually get something back from this spending every time you swipe.
Issuers are handing out wild bonuses right now. With some you can earn up to 5% back on every purchase. That’s like getting a 5% discount on everything you buy!
Our top pick is kind of hard to imagine. Not only does it pay up to 5% back, it also includes a $200 cash back reward in the first six months, a 0% intro APR, and…. $0 annual fee. It’s quite literally free money for any one that uses a card regularly. Click here to learn more!
Flywheel Publishing has partnered with CardRatings to provide coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.