DETROIT, July 25 Reuters General Motors Co and Ford Motor Co are about to replay a script they have played out many times before trying to convince investors they can get through a recession without skidding into the red.
Analysts have been cutting share price targets and profit estimates for the Detroit automakers over the past several weeks, in tandem with downbeat outlooks for the global economy. High energy prices, rising interest rates, inflation, snarled supply chains and stubborn persistence of the COVID virus all bode ill for automaker profits, analysts said.
At the same time, some analysts say a recession could be mild, and demand for vehicles could recover more swiftly than in the past. One big difference from past slowdowns is that GM and Ford39;s U.S. dealers are not sitting on big inventories of unsold vehicles that would have to be discounted to sell.
We believe the setup over a multiyear horizon is skewing more positively, Bank of America analyst John Murphy wrote in a note, citing lean inventories and pentup demand from consumers who held off buying as vehicles became scarce and expensive.
Both GM and Ford also have healthy balance sheets, certainly compared to the period leading up to the 20082009 financial market crisis that pushed GM into bankruptcy.
GM, which reports results on Tuesday morning, has stuck to its fullyear profit guidance, even after disclosing that it had 95,000 vehicles in stock that it could not ship during the second quarter…