Chrysler has shut down all production until it emerges from bankruptcy. This is expected to take at least 1 to 2 months. Meanwhile, GM has stopped production at most North American plants for 9 months starting May 4.

Chrysler was forced to stop production while GM is simply constipated. There are too many cars backing up at the ports and not enough sales.

So what does this mean for car buyers? GM is trying to reduce their supply to meet demand. Typically, car manufacturers either reduce supply or offer more incentives to accomplish this. Incentives have failed so GM is trying production cuts.

We probably won’t see great incentives from GM over the next couple of months, but after they start production again, if sales haven’t improved, expect to see more rebates.

As for Chrysler, they’re simply in a mess right now. Nobody wants to buy a car from a bankrupt manufacturer. At this point, a production stop by Chrysler isn’t going to make a huge impact on prices. In fact, Chrysler just announced rebates of up to $6,000 on their 2009 models.

Filed under Chrysler, GM.