Can GM Survive?

One sector that's taking a huge hit in the stock market meltdown is the domestic auto industry.

On Thursday alone, General Motors' stock fell nearly a-third yesterday, closing at $4.76 a share, the lowest it's been since March of 1950.

Analysts are questioning its very survival, along with the other two members of Detroit's "Big Three," Ford and Chrysler.

Is this the beginning of the end of the Big Three?

"It probably is to some extent," observed Csaba Csere, editor in chief of Car & Driver Magazine. "I think most people believe the three Detroit automakers will not survive as independent entities going forward. At least one of them is going to either go down or be consolidated with some other car company."

He remarked to co-anchor Julie Chen that, "This has been the worst possible year for the car industry. We started off with a soft economy, falling housing prices, people were feeling poor, and so car sales were very slow getting out of the gate this year.

"Then we got the high gas prices. Gas hit $4 a gallon and really took the truck sales down, and all three of the Detroit carmakers have the majority of those sales in pickups, SUVs and vans, so that really hurt them.

"Then we had this third blow with the financial crisis and, suddenly, it's very hard to get money to lease a car or to buy a car with a loan. And this has really hurt car sales even more.

"So, they've taken three major body blows. And of course, the Big Three carmakers have been losing share for years going into this year. So, this is sort of getting hit hard at the end of an extended illness."

That doesn't mean the picture is entirely bleak, Csere says, pointing out that, "Gas prices going down are helping a little bit. They're at $3.39 or so nationwide. Here in Detroit in some areas, it's close to $3 a gallon already. If that continues, that's going to help them a little bit. The federal loans, the $25 billion package to help the car companies retool for more fuel-efficient cars is going to help them.

"But probably the most important thing right now is for the financial system to come back to life so that people can get money and also so that these car companies can raise some money, because that's what they need in order to retool their factories."
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