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.