GM Loses $2.5 Billion in Third Quarter of 2008

Automobile Staff
#Gm, #Ford
Gm Headquarters

The announcement of Ford's $129 million loss was significant enough, but the revelation that GM lost $2.5 billion in the third quarter of 2008 is much more debilitating. Now more than ever, the company totters on the verge of bankruptcy.

Though CEO Rick Wagoner insists the firm won't go through Chapter 11 proceedings, the release of the financial data warned that without a rapid and miraculous change in economic and market conditions or a government bailout (an idea GM seems to ask for in its press release), GM won't have enough liquidity to simply function by the end of the year. Like virtually all automakers, GM watched its profits fall from a combination of poor sales and a crumbling economic market. Gross revenue for the third quarter of 2008 was $37.9 billion, down almost fourteen percent from 2007. Before taxes, GM's automotive operations lost an "adjusted" $2.8 billion. Virtually every automotive division, save for GM's operations in Latin America, posted both gross and net losses, heavily damaging the company's bottom line. Executives claim the plan to reduce operating costs by $1 billion is still "on track," yet a new round of belt-tightening is slated to begin. Budgets for dealer networks, advertising, and engineering programs is being slashed drastically, though GM claims the 2011 Chevrolet Volt program is relatively unaffected. Other vehicle programs, however, may not be so lucky. While GM's release states vehicles like the Cadillac CTS wagon and SRX crossover, along with the 2010 Chevrolet Camaro, and Equinox, are 'safe,' other new offerings are likely to be indefinitely delayed. GM mentions the Chevrolet Cruze's launch is on-target, though we've heard its launch in the U.S. could be delayed until 2011. And while it's not mentioned directly by name, all talks with Chrysler regarding a possible merger are also on hold. As could be expected, another round of layoffs is expected. Unlike Ford, GM's mum on exact figures, but did mention it hopes to decrease its salaried employment costs by thirty percent. Sources tell us precise figures on both headcount reductions and pay cuts will be announced early next week.

First: Go to Exxon/Mobile for a cash infusion since the government is not too interested. Give them a stake as well as partnering with them to work on alternative fuels so they can be guaranteed a piece of the pie. Might be good PR for them anyways after having record profits in times like these.GM finally seems to be putting out good product (Malibu, CTS, Aura etc.) but it is too little too late. If I were king I would do the following:Cadillac - Keep it coming. Escalade brought people under 50 to the brand, now they are buying your cars. Market heavily abroad, especially China, Russia and Arab countries.Chevrolet - Get the Volt and Cruze on the streets at all costs. Use the Malibu as a template (both quality and style) for an updated Impala. Is the Monte Carlo dead yet? Let the next HHR be a mini people mover like the Mazda 5. Ditch any retro cues in upcoming designs. Think forward. Find a partner to develop a new minivan, perhaps European so Opel and Saturn can have it as well.Pontiac - Performance at sub-Acura pricing. Keep ditching the body cladding and cheap materials. The Grand Prix needs help badly. Give the next G5 a more aggressive rear end. Could there be a future GTO or Firebird?Saturn - Keep the Opels coming. GM needs to be thinking about world cars to stay competitive.SAAB and Hummer - Sell them. Might be kind of difficult as they are too integrated platform-wise with other GM product, but perhaps GM could help out with components until new buyers phase in their own.Buick - Kill it off in the states. Keep the name alive in Asia, but sell other GM product tweaked to be Buicks.GMC - Kill the name. Let all the trucks be Chevys. Hopefully the savings from killing off Buick and GMC would help cover the costs of restructuring and buying out dealers. Many of these might close anyways with the current downturn.All brands should be thinking in terms of alternate fuels and dedicated models like the Volt.
If the government wants to bail out Ford or GM, let's get double our money by requiring the company to produce only hybrid and electric vehicles going forward. That way our taxpayer investment at least goes towards developing technologies to move us towards energy independence.

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