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October 28, 2008

AS talks between General Motors and long-time rival Chrysler continued over the weekend, a harsh reality has emerged.

Without a merger and possibly aid from the federal Government, two of Detroit's Big Three auto makers could run out of cash within a year.

Without external intervention, from consolidation or government assistance, we expect GM to reach its minimum cash position in under 12 months," Deutsche Bank auto analyst Rod Lache wrote last week.

In an interview, Mr Lache added that Chrysler was also running dangerously low on funds. "We believe Chrysler is in the same position. It's either August 2009 or December 2009 they run out. Both have a limited runway."
GM and Chrysler, through a network of 10,000 dealers, have combined US sales of between $US110 billion and $US130 billion, a figure that approaches 1 per cent of the US gross domestic product. They employ an estimated 145,000 people in the US at more than 110 assembly, stamping and parts plants.

An additional 600,000 retirees depend on the two car makers for health care and pensions.

Complete Article:
GM, Chrysler seek cash for marriage as bankruptcy looms | The Australian
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