Tough times for global carmakers

Despite the greater-than-expected losses reported by Ford and GM today, such abysmal results fail to surprise anyone these days. The U.S. car industry's "Big Three" have lumbered on with bloated bureaucracies and product lines for many years now. But what the financial crisis has done is bring into sharp relief which carmakers are poised for survival and which are destined for the scrap heap.

Carmakers the world over have been hurting. Sales at BMW fell 8.3 percent in October, while Toyota recently cut its year-end profit forecast by 63 percent. The outlook is particularly bad for Europe, since 60-80 percent of car purchases there use credit-financing, the availability of which continues to shrink, while only 30 percent of car purchases in Japan are credit-financed. Meanwhile, slower automobile production in Europe is also taking a major toll on U.S. parts suppliers, adding insult to injury as the suppliers' prospects have already tanked with the car industry at home.

But even if carmakers everywhere are suffering, what sets apart a company like Toyota, currently the world's largest car manufacturer, is cash. Toyota has $18.5 billion in cash and a steady hand on those reserves. As for General Motors, flagging sales have caused the company to burn through $6.9 billion in cash in the last quarter alone. Fewer people are buying cars, but GM still has to pay its bills -- employee's wages, the costs of running factories, etc. Now, GM admits it may drop below $11 billion in cash reserves, the minimum it needs to pay those bills, before the year is out. That means bankruptcy. Ford is slightly doing better, but not by much.

So, can U.S. automakers still stage a comeback? They're already behind on fuel economy and alternative energy. GM has some big projects in the works, but it might not survive long enough to see them through. Millions of jobs are at stake, and President-elect Barack Obama seems to favor providing some aid to automakers. But we'll have to see if taxpayers want to get involved. They're probably still reeling from buyer's remorse after scooping up Fannie Mae and AIG.