Ford Might Be the Winner if the Auto Bailout Fails

Ford CEO Alan MulallyAlan Mulally could be forgiven if he thought, The heck with this — don't give us any money, as he and fellow auto bosses Rick WagonerRick Wagoner and Robert Nardelli took a beating from unfriendly Senators at a hearing in Washington on Tuesday.

The reason is that Ford alone among the Detroit Three has enough dry powder to get through what will be a very difficult 2009, when car sales aren't expected to top the 11.8 million units sold this year. (In 2007, 16 million cars and light trucks were sold.) General Motor's Wagoner and Chrysler's Nardelli made it pretty clear that without a government bridge loan — $12 billion in GM's case, $7 or $8 billion for Chrysler — there isn't going to be a 2010 for these companies, at least not without a pit stop in bankruptcy. Chrysler ended its third quarter with $6.1 billion in cash — but it's burning through $1 billion a month. Without federal money, Nardelli told the Senate Committee on Banking, Housing and Urban Affairs, "we become dangerously close to minimum liquidity level by the end of the year." (See pictures of the global financial crisis.)

Ford, relatively speaking, is loaded. The company still had $18.9 billion in cash at the end of the third quarter despite having burned through $7.7 billion in that period — half of which was tied to halting the production of F Series pickups because of slow sales. The company recently introduced a new version. Ford Credit, the company's finance arm, remains profitable because, unlike GM's 49%-owned bank, GMAC, it doesn't have a subprime mortgage business. On top of that, Ford can still draw on credit lines totaling $10.1 billion. "We are doing everything we can to create a relevant company for the long term," Mulally told the committee.

source: www.time.com