GM Loses 11.4 Billion Dollars....OUCH

[MYVYSS]

GM loses $11.4 billion
From: Agence France-Presse From correspondents in Detroit
January 27, 2006

GENERAL Motors Corp has posted an $US8.6 billion ($11.46 billion) loss for 2005 in one of the most difficult years in its history.

Losses stemmed from a sharp drop in US demand for its highly profitable sports utility four-wheel drives and massive charges for restructuring and the bankruptcy of its former parts subsidiary, Delphi Corp.
GM, like Ford Motor Co, has recently announced huge job cuts and plant closures to combat a steady decline in market share in North America to Asian competitors.

GM has now scored five straight quarters of steadily mounting losses. This was the first time it has posted an annual loss since 1992.

While the world's largest carmaker vowed to improve its performance in 2006 and 2007, it would not forecast when it would return to profitability.

A number of analysts have warned that GM is at risk of declaring bankruptcy, and the company has seen its credit rating cut deeply into junk territory.

Today's results showed that GM still has sufficient cash on hand to support its massive operations in the near-term, a good thing considering US President George W Bush warned that a bailout is unlikely for the struggling company.
While acknowledging that the current losses were unacceptable, GM's executives said the company was on the right path to recovery.

"In order to improve financial results in 2006 and 2007, we are moving quickly to implement several important actions that will address these weaknesses in North America," GM chairman and chief executive Rick Wagoner said in a statement.

"And we have a good line of sight on the steps we need to take to further reduce structural costs on a global basis that will position GM for long-term success."

Investors took little comfort from the assurance, with GM shares closing down 3.5 per cent at $US23.05 after having fallen to a low of $US21.94 in morning trade.

"The fourth quarter results suggest that the hole from which GM must dig out is deeper than anticipated," said Credit Suisse First Boston analyst Chris Ceraso, who downgraded GM stock to neutral from overweight.

GM's loss of $US15.13 a share was sharply lower than the consensus forecast of a loss of just $US4.17 a share.

"2005 was one of the most difficult years in GM's history, driven by poor performance in North America," Wagoner said.

"It was a year in which two significant fundamental weaknesses in our North American operations were fully exposed - our huge legacy cost burden and our inability to adjust structural costs in line with falling revenue."

[tex]

Thanks for the update, with the news that Ford Mo CO is going to close 12 plants in the States and lay off 30000 staff, things in the global car industry are not looking good.

The bubble was always going to burst in the States.... specifically their love of 7m long SUV's powered by the worlds most fuel inefficient engines. Of course it is a bit of a cyclic thing, the fuel price shock will fade, people will get used to it and life will go on. And I bet in a couple of years time they still buy more big, useless, over stated shiny trucks than any other part of the world.... they just can't help themselves.

I wish Ford MO Co was not in the poo, but when you have to spend nearly 2 billion on a vehicle recall.... ИИИИ n trucks again, fitted with dodgey Firestone rubber, then this will knock the bottom line around for a bit. They will survive, both companies (Ford & GM) have other businesses, some more profitable than others, but they are both fairly well positioned to work their way into the black.

All they have to do, is design and build popular, efficient and most importantly, vehicles that there is a reasonable margin in. (And big useless trucks don't do it)

[vztrt]

Originally Posted by tex

I wish Ford MO Co was not in the poo, but when you have to spend nearly 2 billion on a vehicle recall.... ИИИИ n trucks again, fitted with dodgey Firestone rubber, then this will knock the bottom line around for a bit. They will survive, both companies (Ford & GM) have other businesses, some more profitable than others, but they are both fairly well positioned to work their way into the black.

If you mean the roll over issue (that other car companies also had) the bad batch of Firestone rubber highlighted the poor engineering of the SUV (that ford knew about since the Bronco). It took this issue for the vehicle to get a wider body.


Hopefully GM will pull thru and than the Ford V Chev (Holden) rivalry will continue

[Des]

When will GM and Ford stop looking for the quick and easy buck and sell a Falcon/Commdore style car in the US? The 300C is selling strongly last time I heard. Trucks and truck based SUV's are cheap and easy with high profits but are only a short term fix. I wonder if they realise just how many large imported sedans are being sold over there at the moment?
*EDIT* Ford Aust. has already proven (with some brains and determination) you can build a successful and profitable SUV style vehicle from these platforms, Territory anyone?

[vztrt]

Originally Posted by Des

When will GM and Ford stop looking for the quick and easy buck and sell a Falcon/Commdore style car in the US? The 300C is selling strongly last time I heard. Trucks and truck based SUV's are cheap and easy with high profits but are only a short term fix. I wonder if they realise just how many large imported sedans are being sold over there at the moment?

Actually the SUV came along when the emission laws were made stricter and the motors had to be more efficient. But Trucks and utilities were exempt and so was the the SUV. That's why there so ridiculously huge and inefficient.
But I agree that more commo/falcon type cars would be better in that market, something that they know will forfill most of the needs of the consumer.

[ebxr8240]

The Crown Vic is nothing to write home about either..
http://www.fordvehicles.com/cars/crownvictoria/
Actually I think Ford have made money on there F series over the years..If the public buy these big rigs then they have to supply them..I was talking to a Ford guy while in Detroit ..What they are trying to do is get a model / platform that can be made to stetch over a wide variety so they don't have to close down plant or have many different plants to make there vehicles..So they can diversify from vehicle to other very quickly..I guess like suv's have same running gear as Crown vics etc..
Alot of people went away from G.M vehicles when they went front wheel drive..

[SB076]

Interesting that I have been told that GM Aus is actually making money, however they are holding stock of a reasonable amount of vehicles. Hope everything works out for both Ford and GM US, as the flow on effects will cause our manufacturers problems.