GM reports net loss of $2.5 billion, more cuts and asks for help

[DanielXR8]

From Autoblog

http://www.autoblog.com/2008/11/07/g...asks-for-help/

GM reports net loss of $2.5 billion, more cuts and asks for help
Filed under: GM, Earnings/Financials

Ford Motor Company's third-quarter earnings report released earlier today basically said, "Times are bad, but we'll be aight." General Motors' just-released earnings report for the same time period says "Holy effin' hell, we're running out of things to cut, please help us!" We'll try and it keep it simple, but the main number is $2.5 billion, as in $2.5 billion lost during the Q3 '08. That compares with a $42.5 billion loss this time last year, but the bulk of that was attributable to a one-time charge against the books. Unfortunately, not only was GM North America revenue down, but the automaker claims the credit crisis has made its way around the world and contributed to losses in GM Europe and GM Asia Pacific, as well as its own financing arm, GMAC.

Here's the bigger story: General Motors burned through $6.9 billion of its cash reserves during Q3 '08, which reduces its bank account from $21 billion at the end of Q2 to $16.2 billion today. That's barely enough for such a big automaker to survive the coming winter, so In response, GM has announced to create an additional $5 billion of liquidity by the end of 2009. Below are the big changes we can expect.


Retiming select vehicle programs in North America and Europe by three to 12 months, i.e. lengthening product lifecycles
Deferring capacity expansion projects
Lower sales promotion spending, i.e. less advertising
Less support of dealer network activities and channel consolidations
Scaling back production
Curtailing discretionary spending (travel, consulting, over-time, etc.)
Increase reduction in force from 20 to 30%
Three other things deserve mention. The first is that rumors of the Volt being delayed are untrue. In fact, GM says that spending on the Volt and other fuel economy initiatives will be increased. The second is that GM acknowledged it was considering acquiring Chrysler LLC (though it wasn't named directly), but the merger talks have stopped for the time being. And finally, the main message GM wants to get out via its earnings report is that despite cutting spending even more, it considers government aid essential for its survival. So, ball in your court, Obama.