GM And Ford Say They’re Preparing For An Economic Downturn

General Motors and Ford say they are preparing for a potential economic downtown that could be triggered by the ongoing trade war between the United States and China, Reuters reports.

Speaking at a recent J.P. Morgan Conference in New York, Ford North American chief financial officer Matt Fields said the car manufacturer has a $20 billion cash buffer in the event of another global recession. Similarly, GM’s finance head Dhivya Suryadevara revealed at the same event that Ford’s biggest rival has $18 billion in cash if needed.

General Motors revealed at the conference that it has modeled both moderate and severe downturn scenarios similar to the 2008-2009 financial crisis to ensure it can weather the storm.

Also Read: Trump Administration Denies Chinese Tariff Relief Requests From Tesla, GM, Uber

“It’s something that we continually keep watching and updating to make sure that we’re all set for when the downturn does come,” Suryadevara said.

In addition to ensuring it has a lot of cash on hand, General Motors is looking at deferring non-essential capital expenditure and shifting to lower-priced vehicles as part of its “downturn planning.”

Ford says it is “proactively” evaluating the future of the economy and is working with experts to model the impact of a potential recession.

This year has proved to be extremely volatile on the world markets as many economists try to predict the next economic downturn. Tit-for-tat tariffs between the United States and China in recent months have already had detrimental impacts on the production and sales of cars around the world due in part to rising raw material costs.

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  • Craig

    All companies should ALWAYS be prepared for an economic downturn.

  • SD38439

    I guess it only took GM 110 years to figure out the game of economics is a rigged loop of highs followed by collapses. Good for them for being prepared this time.

    • bd0007

      Granted, GM hasn’t been particularly well run in decades, but the auto market simply collapsed during the onset of the Great Recession (Ford would have gone under if it hadn’t been for the C4C program).

      GM would have been in better shape if (1) the credit markets hadn’t frozen and (2) if activist shareholders hadn’t instigated a couple of share buy-backs in the year prior which dwindled GM’s cash reserves.

      • SD38439

        Actually, in 2006 Ford mortgaged all the company’s assets for billions in loans to finance an overhaul, which give them a cushion for the recession that eventually happened.

  • HD

    It’s not going to be a simple economic downturn. It will be a massive change of user behavior. People are going to buy less and less cars. Most cars will be used by multiple people, as the system of having a car parked 95% of the day is not sustainable. What’s more, the new generation is not interested in driving. Automated cars will take over, and will be shared among many. We are at the peak of private ownership worldwide.

    • Ben

      I think you really underestimate how much people like having their personal space, especially before and after work.

      • HD

        I think you should analyze trends instead of looking at things from your own personal (limited) perspective.

        • Ben

          Seems like you took what I said as a personal insult. I only disagreed with your opinion. You said “will” and “going to be” so I thought you were projecting a sense of what you thought was going to happen, your perspective. What works in congested cities and small countries the size of a US state isn’t always indicative of what will happen to a large country that is spread out such as the US.

          • Bash

            You are absolutely right, plus we all have read how disparate people are there to get a personal private space, they rent a car for god sake just to take a nap or make a phone call!!

          • HD

            I didn’t, I’m just not interested in personal opinions when there are facts. Car sharing is increasing double digits each year. Now over 10 million people use them. Autonomous cars are not a matter of question, just a matter of (single digit) years. It’s also a fact that the new generation buys much less cars and are generally less interested both in driving and owning things. Sharing economy is booming in all fields. If you add all this up, you know that even in the countryside in the USA people will be using more autonomous cars, and hence own less private cars. So yes, I can be all my money that car production will decrease in numbers in the coming years and decades on the average (annual fluctuation doesn’t matter).

  • LJ

    As shown by their recent currency manipulation practices, China would prefer a global recession to giving up their ability to steal intellectual property.

    • HaltestelleLuitpolthafen

      China will find other ways to manipulate, cheat and steal from legitimate companies. They always do…

      • A 🤴🏻 THAT WILL RULE OVER YOU

        Steal what? You muricans are so quick to blame on someone’s action. Just pathetic.No wonder why your country is going down the drain.

        • HaltestelleLuitpolthafen

          Yeah, China is a beacon of perfection.

          They haven’t recently had any issues with human rights violations, currency manipulation, population control, censorship, and IP theft. /s

          Oh, that’s right. You wouldn’t know anything about that because state sponsored news doesn’t report on any of it because it is all censored and swept under the rug.

          • A 🤴🏻 THAT WILL RULE OVER YOU

            Girl, you need to relax and take some D. I know it’s a hard stressful life for you.

    • db

      That has been China’s way for a very long time now. Look at all the forgery going on over there from women’s handbags, to iphones, to Ford trucks.

      • Ben

        Bingo!

    • bd0007

      Which is why it has been absolutely asinine to have trade fights w/ all our allies and other countries which take issue w/ China.

      Would have been much smarter to form a coalition w/ all these countries to pressure China to amend their ways (not that they wouldn’t try to cheat).

  • sidewaysspin

    And in the midst of a global recession let’s hope war is not the next step.

  • Six_Tymes

    Every car company on the planet should be ashamed of themselves for being so greedy. Every car/suv/truck is stupidly overpriced. car companies priced themselves out of reach of most consumers. idiots, they are part cause of the upcoming down turn.

  • Nick099

    —-“Tit-for-tat tariffs in recent months have already had detrimental impacts on the production
    and sales of cars around the world due in part to rising raw material
    costs.”—–

    Really? Not in the US…..the largest economy the world has ever seen. Inflation at a stable 1.4%. Investment money is pouring in. Jobs are all over the place. As other nations around the world make it difficult with their Socialist BS, dollars will flow back to the US where the red carpet has been rolled out for entrepreneurs and manufacturers through lower taxes, less regulation, and massive energy production.

    Now China has some problems as they have been allowed to get away with a lot for the last 30 years. They devalued their currency and they are propping up their businesses with cash. As all large business in China is controlled by the Commie Party…that is expensive. They threatened western companies with forfeiture of assets if they follow US law.

    Ford and GM have been heavily invested in China….that is going to cost them. Oh well.

    They should learn from Toyota, who has just announced yet more investment in the US.

    The point? Waves are being made as supply chains are disrupted and re-routed. The Us economy is being restructured from a service-based economy back to a manufacturing-based one. There may be recessions here and there, but it ain’t happening in the US. If Ford and GM are negatively affected by these changes, it’s cause they bet poorly on future events.

    • Puddingpopper

      thoughts and prayers that you are right, but the only way we become the manufacturing power house we once were is to get into WW3

  • Puddingpopper

    sounds like a self fulfilling prophecy

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