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GM, Ford Evaluate Possible Economic Slump
General Motors and Ford say they have bolstered their cash reserves in case the trade war between the U.S. and China triggers a global recession.
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General Motors and Ford say they have bolstered their cash reserves in case the trade war between the U.S. and China triggers a global recession, Reuters reports.
The two companies told analysts at a J.P. Morgan conference in New York City that they have modeled downturns as severe as the Great Recession in 2008. The company notes that tariffs have increased raw material costs for all global carmakers.
Ford CFO Matt Fields says his company has been huddling with economists to model possible responses to an economic slowdown.
Dhivya Suryadevara, GM’s chief financial officer, says the company has run moderate and severe downturn scenarios to show they would affect GM profits and cash flow. She doesn’t anticipate an imminent downturn, but she says the modeling process helps to “make sure we’re all set for when the downturn does come.”
Ford and GM told conference attendees they have cash buffers of $20 billion and $18 billion, respectively, to help weather a downturn. GM’s Suryadevara says the company also is modeling such potential moves as reducing non-essential spending and shifting production toward lower-priced models.
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