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GM, US Auto Industry Will Be Fine: Analyst

Monday, 1 Jun 2009 | 11:46 AM ET

John Wolkonowicz, senior analyst at IHS Global Insight, and Alex Taylor, senior editor at Fortune Magazine, discussed the General Motors’ bankruptcy and the future of the automobile industry.

Wolkonowicz said he is optimistic about the U.S. auto industry — and he believes the restructuring plan is going to allow GM to be profitable or break even at a 10 million unit total industry volume.

“We’re already projecting for 2010 that we’re going to soar past that,” Wolkonowicz told CNBC. “We’re running at 9.5 million units this year and [GM] only has to get about 10.5 to be somewhat profitable.”

GM's Day of Reckoning
Insight on the automaker's declaration of bankruptcy, with Alex Taylor, Fortune; John Wolkonowicz, IHS Global Insight and CNBC's Phil Lebeau.

Taylor said that while the government is really overstepping its bounds by interfering with GM, it’s inevitable.

(Watch the video for more analyst insights.)

“I believe they have to do it because the failure of GM would really be a kick in the rear for the U.S. economy and that just can’t sustain that,” he said.

  • GM Files For Bankruptcy, Chrysler Sale Cleared

On the other hand, Taylor said he is not surprised by GM’s bankruptcy, as the company had been seeing a downturn since the 1980s.

“They couldn’t get rid of the old structure,” said Taylor. “And so GM lines up in the predicament they’re in today.”

Taylor said it’s going to be difficult for GM to reemerge from the bankruptcy.

“The company is going to have much fewer brands, much fewer dealers and it’s going to have the stigma of bankruptcy attached to it. It’s going to be in a very competitive market and it’s going to be tough for GM,” he said.

Disclosure:

No immediate information was available for Wolkonowicz or Taylor.

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