GM denies that Stempel will quit

GENERAL MOTORS and its ailing chairman, Robert Stempel, both issued firm denials yesterday to a report that the car maker's board is seeking his resignation.

Mr Stempel, 59, assumed the job only two years ago on the retirement of the controversial Roger Smith.

However, in April, outside directors on the board led by the former Procter & Gamble chairman John Smale stripped Mr Stempel of his role as chief executive and awarded the title to a new president, John Smith, replacing Mr Stempel's designated heir.

A report in yesterday's Washington Post said the board members remained unhappy with the pace of change under Mr Stempel's cost-cutting programme.

Under the plan 21 of GM's 120 plants will be closed while 75,000 of its 360,000 employees will be made redundant by 1995.

GM, the industry's highest-cost manufacturer, has lost more than dollars 16.5bn ( pounds 10.2m) on its North American car and truck operations since Mr Stempel took office.

Further bad news is expected next week, when GM is expected to report another loss of dollars 845m for the business quarter which ended last month.

Analysts are growing worried about the financial future of the world's largest corporation. A third US credit rating agency lowered GM's debt rating yesterday, citing fears about the continued erosion of market share and the lack of available capital to invest in new product lines.

The Washington Post article also quoted unnamed board members as saying they planned to close Oldsmobile, one of GM's six automobile divisions. Last year GM sold half as many Oldsmobiles as it did in 1986.

It added that the board was also reviewing the company's entire marketing strategy.