Angry GM withdraws ads from LA Times

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The Independent Online

General Motors has pulled its advertising from one of America's most heavyweight newspapers, the Los Angeles Times, after it called for the car maker's chief executive, Rick Wagoner, to be sacked.

General Motors has pulled its advertising from one of America's most heavyweight newspapers, the Los Angeles Times, after it called for the car maker's chief executive, Rick Wagoner, to be sacked.

The world's largest car manufacturer which is struggling from slowing sales and a slumping share price, confirmed yesterday it had decided to stop advertising in the west coast publication due to "factual errors and misrepresentation" in its articles.

In a review of a new Pontiac on Wednesday, the newspaper's car correspondent, Dan Neil, wrote that Mr Wagoner should be "dumped" and said the Detroit-based company was "morass of a business case".

General Motors denied its decision to stop running the ads was in direct response to the attack. The company said a series of articles "over a period of some time" had included inaccuracies, though it would not give specific examples.

America's large car makers are struggling because of fierce competition from low-cost operators in China and other parts of Asia. Higher oil prices have also hit car manufacturers at a time when they are having to pay hefty sums in pensions and health benefits for retiring workers under generous contracts dating back to the Sixties.

Concerns about General Motors' financial health prompted the ratings agency Moody's to downgrade the company's debt this week to just one notch above junk. The move came as Mr Wagoner said he would personally take charge of the company's key North American market to try to turn around the company.

A spokesperson for General Motors said: "We very much support freedom of the press and the LA Times' right to report and editorialise as it wants. But we also have freedom to spend our advertising dollars as we want to". A spokesperson for the Los Angeles Times said: "We have heard some concerns from General Motors and are examining them. We will look into any complaints GM has about inaccuracy or misrepresentation and will make any appropriate corrections."

The Los Angeles Times is owned by the media publisher Tribune, which also owns the Chicago Tribune. Mr Neil won a Pulitzer Prize last year for his reviews of new cars.

General Motors is one of the largest borrowers in the world. Corporate bonds taken out by the company and its parent, GMAC, add up to about $300bn.

The possibility that General Motors might be downgraded to junk would force many fund managers who cannot hold stakes in companies rated at below investment grade to sell their holdings. Analysts are also downbeat about GM's shares. Citigroup said yesterday investors should sell shares, after GM said this week sales in March had been lower than a year ago.

The bank also cut the rating of Ford from buy to hold. Its analyst, Jon Rogers, said: "While Ford management is taking the right steps from a product and capacity standpoint, we believe it will be difficult to avoid the ripple effect of GM's woes."

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