With sales down and the economy slowing, it's been rumored that one or more of the Big Three could soon be forced to declare bankruptcy. The concerned automakers continue to refute this, however, and recently General Motors CEO Rick Wagoner even went so far as to lay out GM's finances to prove the company is solvent. Sometimes it may seem like automakers' denials are getting a little repetitive, but it turns out they have good reason to keep protesting -- most Americans in the market for a new car would avoid a brand that had filed for Chapter 11 bankruptcy.
A recent study from automotive market research firm CNW surveyed 6000 people intending to buy a new car within six months, and discovered that more than 80 percent of them would switch brands if the vehicle they wanted came from an automaker that went bankrupt. Breaking it down by company, Americans were more likely to abandon domestic automakers than foreign ones, with Chrysler faring the worst -- a full 91 percent of buyers wouldn't take home an Auburn Hills product if the company went bankrupt. Ford and GM didn't do much better, with 80 percent of those surveyed saying they would jump ship if things went south.
Unlike GM, which has repeatedly insisted it has no plans to axe brands (besides Hummer, of course), Chrysler recently denied reports it had already filed for bankruptcy protection after a memo from CEO Bob Nardelli said the company was experiencing its "lowest sales level in 16 years." With sales of high-profit trucks and SUVs down times may be tough for the industry, but according to CNW's research automakers need to do everything they can to stay out of the red. Calling bankruptcy a "disaster" for a brand loyalty, the research firm claims buyers would see the move as "admitting defeat."
With rising raw material costs and automakers hurting around the globe, many have wondered exactly how a bankruptcy declaration would impact the buying public. Now CNW says that even if an automaker stays in business after a filing, shoppers would avoid its vehicles mostly because they have other good options to choose from. Unlike the days when a driver might stick with his favorite automaker through thick and thin, according to CNW today's car buyer has "no loyalty to the brand." Of course, this is the same problem that got domestic automakers into trouble in the first place.
Source: Automotive News (Subscription required)