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.
“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.