Will Consumers Buy From A Bankrupt Auto Company?

I’ve read several blog lately that advance as one of their arguments against a bankruptcy of any of the Big Three automakers a study that claims that 80% of buyers would not buy a car from a company in bankruptcy. They neglect to cite the source but do consistently assert the statistic. I did a little digging and came up with this today.

The WSJ reported that a Merrill Lynch survey indicated that 90% of car buyers would buy a car from an automaker in bankruptcy if it had the backing of the federal government. Another survey by CNW Marketing Research indicates that 48% would buy from a company in a chapter proceeding if the government was involved in the process. Turns out that CNW was the source of the original 80% figure.

The CNW Marketing Research survey, of 9,700 domestic car owners completed Dec. 14, suggested 48% of buyers would be willing to consider a product sold by an auto maker in bankruptcy court, as long as the government was involved in the process.

CNW had been the source of an earlier study whose conclusions raised concerns about the impact of a bankruptcy filing on a car company. That survey found 80% of buyers would stay away, and the auto maker’s revenue would plunge.

But CNW President Art Spinella said in an interview Tuesday that new research suggests people would feel much better about a bankrupt auto maker’s chances “as long as there are loan guarantees by the government.”

The results contradict much of what executives at U.S. auto makers and the United Auto Workers argue would be the impact of a bankruptcy on one or more of the companies.

If consumers will purchase tickets month in advance from a bankrupt airline with no government assurance those tickets will be worth anything, I see no reason they won’t buy a car from GM if it is going through an eleven so long as the government stands behind the warranty. So the next time you see someone throwing around the 80% number of non-buyers you have a link to send to them to get their facts straight.

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