Wednesday, May 20, 2009

Does Bankruptcy Hurt Car Sales?

One question that has been raised as part of Chrysler's bankruptcy is whether the bankruptcy would hurt Chrysler's sales. I'm not an expert in the automotive industry, so I've kept my opinion on this matter to myself.

Interestingly, someone who IS an expert in the field just made a statement a short time ago that was reported by AP. Specifically:

A top Chrysler executive says the company is selling cars and trucks better than expected this month despite being under bankruptcy court protection.

Executive Vice President of Sales Steven Landry says that early data for May shows the company selling 60,000 to 70,000 vehicles to individual buyers during the month. It sold about 61,600 retail units in April before the bankruptcy filing.

I don't think this helps the argument being made by Chrysler and the Administration that there is a need for an expedited sale process under Section 363(b) to preserve the value of Chrysler's assets.

I wonder if anyone at Jones Day was consulted before this statement was made.

On the other hand, it is good news for Chrysler bondholders that the company is doing better than expected.

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