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GM Considers More Cuts As Sales, Stock Fall

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By TOM KRISHER

The Associated Press

Published: July 8, 2008

DETROIT - DETROIT - General Motors Corp. may get rid of some brands, speed the introduction of small cars from other markets and make further white-collar job cuts as it tries to deal with a shrinking U.S. auto market.

A person familiar with the company's discussions said Monday all options are being considered as GM tries to cope with the dramatic shift in consumer buying habits from trucks to cars and crossover vehicles.

GM announced last month that it would close four truck and sport utility vehicle plants and boost production of several existing car models.

Its sales are down 16.3 percent this year, and last week GM's stock price closed below $10 for the first time since September 1954.

The job cuts could be considered by GM's board of directors when it meets in early August, The Wall Street Journal reported Monday.
Company spokeswoman Renee Rashid-Merem would not comment on potential job or brand cuts, but said the company has made it clear that action would be taken if the U.S. auto market worsened.

"If conditions persist or deteriorate, then we'll continue to take aggressive actions," she said Monday.

GM's stock price dropped to a 53-year low of $9.96 on Wednesday after Merrill Lynch analyst John Murphy wrote in a note to investors that a GM bankruptcy "is not impossible if the market continues to deteriorate and significant incremental capital is not raised."

The next day, JPMorgan analyst Himanshu Patel called the bankruptcy fears overblown but predicted GM will burn through $18 billion in 2008 and 2009 as it struggles with depressed U.S. sales.

GM has $24 billion in cash and $4.6 billion in credit on hand, he said, so it doesn't need to raise more money immediately. But he predicted the automaker will try to raise another $10 billion in the third quarter by mortgaging trademarks, international operations and other assets.

Critics have said GM still has too much fat in its middle management, despite cutting white-collar employment to 32,000 last year from 44,000 in 2000. They also say the engineering, manufacturing and marketing costs are too high for it to keep all eight of its brands.

Through the years, analysts have suggested cutting or selling the Buick, Saab or Saturn brands, perhaps jettisoning them like GM did with Oldsmobile in 2004.

Chevrolet and Cadillac remain the company's strongest sellers.

Buick sales are down 21 percent this year, while Saab is down 29 percent and Saturn sales are off nearly 19 percent. Saab, the Swedish automaker, sold only 12,068 vehicles during the first half of 2008. Saturn sales have declined nearly 19 percent for the year even though its model lineup has been revamped.

GM has decided to study the sale of its Hummer brand. The big trucks aren't the right product for consumers facing $4-per-gallon gasoline.

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