General Motors rose in German trading after the Wall Street Journal said the automaker may cut white-collar jobs and is considering whether to drop some of its eight brands, which include Buick, Saturn and Saab.
The Detroit-based automaker is also considering options for boosting liquidity to help it get through the economic slowdown, the newspaper said, citing people familiar with the situation.
The Detroit-based automaker is also considering options for boosting liquidity to help it get through the economic slowdown, the newspaper said, citing people familiar with the situation.
The company, however, said Hummer is the only one of its eight US brands being formally reviewed for a possible sale or shutdown.
The automaker’s sales in the US dropped 16% in the first half as record gasoline prices eroded demand for GM’s TrailBlazer sport-utility vehicles and Chevrolet pickups. The carmaker’s shares fell to a 54-year-low last week after Merrill Lynch said GM faced the possibility of bankruptcy.
“Their ship is sinking and they have to shed ballast left, right and centre to stay afloat,” said Peter Schmidt, managing director of Automotive Industry Data, a consultant in Warwick, England. “It does make sense to sell some brands.”
The stock rose 1.4% to $10.12 on July 3, the last day of US trading before the Independence Day holiday. GM has plunged 59% this year.
Options for workforce cuts and for raising funds will be presented to GM’s board of directors in early August, the Journal said. GM probably won’t drop its Cadillac and Chevrolet brand names, the newspaper said.
Saab, the European upmarket brand, may be an early candidate for a sale, though a buyer is far from assured, Schmidt said.
“Saab has been a holy cow in past years and is losing money consistently,” the analyst said. “Credit to GM for holding on to it, but there is a point where you’re left with no choice.” Voice and e-mailed messages sent outside normal business hours to GM spokesman Tom Wilkinson weren’t returned.
Many truck engineers may lose their jobs, following GM’s announcement last month that it will postpone designing its next generation of trucks and sport-utility vehicles, the Journal said.
GM had $24 billion in cash and marketable securities and access to about $7 billion in undrawn US loans on March 31, at least $6 billion more than it initially figured it would need for a US decline, chief financial officer Ray Young said on May 13.
The automaker plans to cut North American production this quarter 12% to about 9,00,000 vehicles. Automakers book sales when a car or truck is built, so lost output reduces revenue. Strikes at GM’s largest axle supplier and two of its own plants trimmed production in the region 27% last quarter.
The annualised US sales rate for June fell to 13.6 million cars and light trucks, the lowest since 1993. Automakers, including GM, said dealers didn’t have enough fuel-efficient cars on their lots to meet customer demand. GM is adding 50,000 cars and so-called crossover sport-utility vehicles, which combine car and light-truck features, to its 2008 production plans.
The average US price of gasoline rose to a record $4.10 a gallon last week, according to motorist group AAA.
