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Pros Say: Auto Shakeup Won’t Boost Demand

Companies:Chrysler | General Motors Corp

By: CNBC.com | 31 Mar 2009 | 04:35 AM ET

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The future of General Motors [GM Loading... () ] and Chrysler remained in limbo after US President Barack Obama told the US automakers they had not yet done enough to secure emergency government funding Monday.

The Detroit-based companies seem certain to face either major restructuring or outright bankruptcy, but experts told CNBC that fixing the automakers won’t be enough to restore demand as the recession grinds on.

Driving Demand for US Autos

Restructuring the US auto sector isn't enough as the real problem lies in the lack of demand, notes Mohit Arora, senior director of J.D. Power and Associates. He discusses the implications on the Asian auto sector, with CNBC.

Chrysler-Fiat Deal a Necessary Step

The need to cut worldwide overcapacity in the auto sector will require a major shake up in the industry, Jim McCaughan, CEO at Principal Global Investors, told CNBC.

Restructuring Auto Giants

Dodge Dorland, chief investment officer at Landor Capital Management, says the US government's move to push out GM's CEO is a message to get changes done quickly, but it can have negative long-term implications.

Challenges for Automakers

Lincoln Merrihew, senior vice president, business solutions at TNS, says GM's bond holders will have to co-operate to ensure the auto giant can provide a concrete recovery plan that is acceptable to the government.

Impact of Auto Shakeup

The shakeup in the US auto industry is a good excuse for Asian automakers to restructure, says Adrian Mowat, chief Asian and emerging markets equity strategist at JPMorgan.

Impact of US Auto Restructuring

Raymond Kong, regional CEO & CIO at OSK International Investments, spoke to CNBC about how the US auto restructuring will impact Asian automakers.

Will a US Automaker Failure Hurt the Dollar?

If a US automaker does file for bankruptcy, the dollar is likely to strengthen against Asian and emerging market currencies, Richard Yetsenga, regional FX strategist at HSBC, told CNBC.

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