"Volatility in the world's financial markets, tightening of consumer and
business credit and historically-low consumer confidence has created a very
challenging environment," said
Over the past several years, GM has been taking major actions to restructure its business and position it for long-term growth, making dramatic reductions in structural cost, revitalizing its product portfolio with award- winning vehicles, growing aggressively in emerging markets around the world and making demonstrable strides in advanced technology leadership (link to release).
As part of its ongoing restructuring, on
To date, the
GM's assets currently being assessed for potential sale include the Hummer
vehicle business and brand and its ACDelco all-makes aftermarket parts
business, which has distribution channels in more than 100 countries. GM is
also evaluating strategic options for its technical and manufacturing center
in
Despite the seizing up of the credit markets, GM completed some capital
market transactions (link to release) in September to improve the company's
liquidity by
In light of the further deterioration in the U.S. auto market and
continued turmoil in the global financial markets, GM is making downward
revisions to its liquidity planning assumptions. For planning purposes, GM is
assuming U.S. light industry sales volumes of 11.7 million units in 2009, and
12.7 million units in 2010. GM is also revising its average oil price
estimates to range between
In addition to its previously announced liquidity and capacity actions, GM
is taking further actions to improve liquidity by an incremental
GM is reducing its capital spending for the calendar year 2009 from
approximately
Although the timing of several vehicle programs will be revised, key
product and technology programs remain on track. GM has a robust pipeline of
competitive new vehicles over the next two years. In GM's largest markets,
U.S.,
GM is also taking steps to reduce structural cost by an additional
GM also expects to make further reductions in engineering expense due to the aforementioned delays in capital spending. In addition, various types of discretionary spending, such as travel, use of consulting resources, and non- scheduled overtime for hourly and salaried employees, will also be restricted.
A number of working capital improvements, totaling approximately
Measures are also being taken to further reduce salaried employment costs
in the U.S. and
Salaried employees will not receive enhanced variable pay (incentive compensation) in 2009 for the 2008 performance period. GM had previously announced there would be no discretionary cash bonuses for 2008 for the company's executive employees.
In addition, GM suspended the company match for the stock savings (401k)
plan in the U.S., effective
Even if GM implements the planned operating actions that are substantially
within its control, GM's estimated liquidity during the remainder of 2008 will
approach the minimum amount necessary to operate its business. Looking into
the first two quarters of 2009, even with its planned actions, the company's
estimated liquidity will fall significantly short of that amount unless
economic and automotive industry conditions significantly improve, it receives
substantial proceeds from asset sales, takes more aggressive working capital
initiatives, gains access to capital markets and other private sources of
funding, receives government funding under one or more current or future
programs, or some combination of the foregoing. The success of GM's plans
necessarily depends on other factors, including global economic conditions and
the level of automotive sales, particularly in
Further detail on the additional liquidity actions and GM's current liquidity position and outlook will be disclosed in a Form 8-K filing with the Securities and Exchange (SEC) later today.
GM has taken a host of aggressive "self help" actions to improve its business, but additional support from the U.S. government to aid the auto industry during this industry downturn is essential. The company has engaged in discussions with various U.S. federal government agencies and Congressional leaders about the important role that the domestic automotive industry plays in the U.S. economy, and the need for immediate government funding support given the economic and credit crisis and its impact on the industry, including consumers, dealers, suppliers and manufacturers. Many in the government have acknowledged the important role of the industry in the national economy and the discussions are ongoing; and at this point, their outcome cannot be predicated with certainty.
"These tough actions, though very difficult to make, demonstrate our commitment and determination to weather this economic downturn and emerge a stronger and more competitive company," said Wagoner. "We remain focused on retaining our focus on product excellence and our commitment to advanced propulsion technology leadership and returning the business to profitability despite the current market conditions."
Finally, GM has recently explored the possibility of a strategic acquisition that it believed would generate significant cost reduction synergies and substantially strengthen GM's financial position in the medium and long term, while being neutral or modestly positive to cash flow even in the near term. While the acquisition could potentially have provided significant benefits, the company has concluded that it is more important at the present time to focus on its immediate liquidity challenges and, accordingly, considerations of such a transaction as a near-term priority have been set aside.
Forward Looking Statements
In these and following presentations and in related comments by General Motors management, we will use words like "expect," "anticipate," "estimate," "forecast," "objective," "plan," "goal," "project," "outlook," "targets," and similar expressions to identify forward looking statements that represent our current judgments about possible future events. We believe these judgments are reasonable, but actual results may differ materially due to a variety of important factors.
Among other items, such factors include: our ability to maintain adequate
liquidity and financing sources and an appropriate level of debt; continued
economic instability or poor economic conditions in the U.S. and global
markets, including the credit markets, or changes in economic conditions,
commodity prices, housing prices, currency exchange rates or political
stability in the markets in which we operate; our ability to realize
production efficiencies, to reduce costs and implement capital expenditures at
levels and times planned by management; market acceptance of our products
including cars and crossovers; shortages of and price increases for fuel; the
ability of our customers, dealers, distributors and suppliers to obtain
adequate financing on acceptable terms to continue their business
relationships with us; significant changes in the competitive environment,
including as a result of industry consolidation, and the effect of competition
on our markets, including on our pricing policies or use of incentives;
changes in the existing, or the adoption of new laws, regulations, policies or
other activities of governments, agencies and similar organizations where such
actions may affect the production, licensing, distribution or sale of our
products, the cost thereof or applicable tax rates; the effectiveness of
recent or future actions by the U.S. federal government, including the
GM's most recent annual report on Form 10-K and quarterly report on Form 10-Q provide information about these factors, which we may revise or supplement in future reports to the SEC on Form 10-Q or 8-K.
SOURCE General Motors Corporation