Fiat write-down drives GM deeper into loss in Europe

General Motors' profits tumbled by 37 per cent in the final quarter of last year after it wrote down the remaining value of its stake in the Italian car maker Fiat, helping drive GM's European operations deeper into the red.

General Motors' profits tumbled by 37 per cent in the final quarter of last year after it wrote down the remaining value of its stake in the Italian car maker Fiat, helping drive GM's European operations deeper into the red.

The world's biggest car maker yesterday reported a decline in fourth-quarter earnings from $838m (£448m) to $569m after a series of one-off items and increased healthcare costs. It also warned it might only break even in the first quarter of this year.

Losses at GM Europe, which includes the Opel and Vauxhall brands, increased from $66m to $345m for the quarter, resulting in a deficit for the year of $742m compared with $286m in 2003.

The increased losses were due in part to the write-off on GM's 20 per cent stake in Fiat and charges associated with a restructuring programme involving a total of 12,000 job losses - about one-fifth of GM's European workforce.

GM wrote down the value of its $2.4bn investment in Fiat to just $220m in 2002 and wrote off the remainder in the final quarter of last year.

The write-down comes as GM and Fiat executives prepare to hold further talks over an agreement signed in 2000 which allows the Italian car maker to force GM to take it over. Fiat maintains that the put option remains "effective and exercisable" from next Monday. But GM says it is now invalid because since the agreement was signed, Fiat Auto has sold off some of its assets.

The two companies agreed to go to mediation late last year in an attempt to settle the dispute out of court before the end of this month. Reports yesterday said that Rick Wagoner, the chief executive of GM, and his opposite number at Fiat, Sergio Marchionne, would meet in the US over the next two days.

GM's profits last year reached $3.6bn but this was driven largely by a record performance from its finance division which reported earnings of $2.9bn. Its car-making operations made a $1.2bn profit on worldwide sales of 9.1 million units.

Mr Wagoner said he expected earnings this year to be between $4 and $5 a share compared with $6.40 last year, based on solid worldwide economic growth which would lift global sales to 62 million units.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test