GM Skids After Delphi's Chapter 11

DELPHI’S NEXT CHAPTER?: The largest U.S. auto parts supplier filed for bankruptcy protection on Saturday following a long battle with high materials and labor costs. DPH lost 79 cents, or more than 70%, to 33 cents. One analyst said that Delphi’s Chapter 11 filing increases the possibility that GM, Delphi’s biggest customer, won’t be able to turn around its operations. In a research note, Banc of America’s Ron Tadross said: “It is our view that bankruptcy protection for GM is increasingly looking like a reasonable way to properly address the company’s retirement liabilities and job security benefits.” Standard & Poor’s lowered GM’s debt rating—again. And Moody’s may follow suit. GM fell $2.81, almost 10%, to $25.48. Other automakers spun their wheels on Monday. Toyota’s stock, TM, lost 94 cents to $89.64 and Honda’s HMC fell 37 cents to $27.74. Meanwhile, a Delphi rival, Dana Corp., said that due to accounting problems, it will restate earnings for 2004 and the first half of 2005, and delay posting its third-quarter earnings for 2005. DCN fell $3.15 to $6.04. One ray of light in the auto industry was a “vehicle value” survey, done by a San Diego-based marketing research firm, which gave high marks to Toyota, Honda, and GM. Toyota’s Scion won big for buyer satisfaction. Honda was the best overall winner, with high points for its fuel economy (which is key these days), resale value, and technological innovations. General Motors got the best score for U.S. automakers. Too bad it couldn’t save their stocks!