CPAs say GM safe through 2012

September 20, 2009

CPAs say GM safe through 2012

BY TOM WALSH
FREE PRESS COLUMNIST

General Motors Co. is a strong bet to survive at least through the year 2012.

The Chrysler Group? Not so much.

And what about the U.S. taxpayers’ chance of being repaid all that money loaned to bail out GM and Chrysler? Don’t hold your breath.

Those are findings from the first-ever Tom Walsh poll of certified public accountants who run small practices in western Oakland County.

I was invited to speak Thursday at a breakfast meeting of this group, affiliated with the Michigan Association of Certified Public Accountants, and was pleased that nearly 40 people showed up.

Who better could I find to take the pulse of the local economy than these small CPA firms that deal with so many business types and sizes? So I made up an impromptu survey of six questions. Thirty people jotted down answers.

The questions were simple. Was the CPA’s own top-line revenue up or down in 2008, and by what percentage? Ditto their expectations for 2009.

Do they think GM will survive another three years? What about Chrysler? And do they believe that GM and Chrysler will repay the federal loans used to rescue the companies?

Lastly, I asked the classic Detroit litmus question: What brand of vehicle do you drive?

The results were somber, yet hopeful at the same time.

Expecting more suffering

Many of these CPAs have been hit hard by the economic downturn and expect that more pain is on the way. Only 7 of the 30 respondents said revenue was up in 2008, while 15 reported declines — ranging from 3% to 50%, and averaging 18%. Four CPAs said they expect no change, and a few didn’t answer.

Their expectations for 2009 are similar. Only 6 of the 30 expect revenue to rise, a dozen foresee another drop and 6 expect a flat no-growth year.

Despite this sober assessment of their own prospects, 80% of the group said they believe that GM will survive at least for the next three years after its Chapter 11 bankruptcy and bailout. Only four of the 30 CPAs predicted a failure; two had no opinions.

Chrysler is a riskier bet, they said. Only 10 of the 30 said that Chrysler, now run by its alliance partner Fiat, would survive past 2012, while 17 said no and three were unsure.

Only five of the 30 CPAs gave an unequivocal yes when asked whether GM and Chrysler would repay their federal loans. There were 19 no’s and four qualified responses — predicting partial repayment or repayment by one company and not the other.

Lastly, it was truly a diverse group of drivers by brand. Ten drove Chrysler products, nine cited GM vehicles, three drove Fords and eight others had foreign brands — one each for Mercedes-Benz, Porsche, Infiniti, Honda, Toyota, Kia and Volkswagen, and one who simply replied "foreign."

The most positive of all the CPAs — with revenue gains in both years and predictions of both survival and full payback by GM and Chrysler — was the Toyota Avalon driver.

The most-negative respondents were the Infiniti, Porsche and Volkswagen drivers.

Go figure.

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