General Motors is developing plans to cut costs and improve its “cash and funding position,” chief executive Rick Wagoner said in an email to the automaker’s managers and team leaders.
“The rapid rise in fuel prices and change in auto industry sales mix have made market and economic conditions very challenging,” Wagoner said in the email. “We’re responding quickly and aggressively with a steady stream of actions to better position GM for sustainable profitability and growth.”
GM shares touched a 54-year low last week, and analysts have said the automaker needs to raise capital to shore up its liquidity in order ride out a sharp downturn in US auto sales. Wagoner said GM’s North American management team was working out new plans to cut costs and shore up the embattled automaker’s cash position.
“Our team continues to develop further action plans to optimise our operating structure under these new market conditions, improve our cash and funding position, and keep our key product and technology investments on track,” he said.
The letter marked the first confirmation from Wagoner that GM was working toward the kind of further restructuring and capital raising programme that Wall Street analysts have said it needs.
GM shares rose almost 2% in early trade to $10.40. The shares have fallen 55% since early May, when evidence began to build of a further slowdown in US auto sales that has hit pickup trucks and SUVs hardest.
GM’s US sales have dropped almost 16% this year, compared with a nearly 10% drop in industry wide US auto sales. Wagoner’s message was sent to managers on June 27 but did not widely circulate until this week because it corresponded with the automakers traditional early July break in operations.
Wagoner encouraged GM employees to focus on ways to conserve cash. “As simple as it sounds, what helps most is for each of us to stay focused on our jobs, and especially on what each of us can do to conserve and generate cash,” Wagoner said. “And just as important, I encourage you to be positive about the future of our enterprise.”
