General Motors fights for survival as it posts $31bn loss for 2008
Friday 27 February 2009
General Motors lost $30.9bn (£22bn) in 2008 as it careered towards the edge of bankruptcy, and it is still tussling with its auditors about whether it can be labelled a "going concern".
Executives from the giant car maker were in Washington yesterday to press their case for more government loans, as the company tries to fund a restructuring plan.
Annual results issued yesterday morning showed that, without an initial $4bn cash injection from the US taxpayer in December, GM's reserves would have fallen below the level it needs to keep dealing with suppliers, something that would have forced it to file for Chapter 11 bankruptcy protection.
So far, GM has drawn down $13.4bn in government loans, and is asking for $16.6bn more.
All four of the company's global divisions plunged into the red in the final quarter of 2008, as the recession spread from the West into emerging markets and car sales plunged, the company said. Losses in Europe ballooned to $1.9bn from $445m in the fourth quarter of 2007 on revenues that were down 40 per cent. Revenues at the Asian division halved.
"2008 was an extremely difficult year for the US and global auto markets, especially the second half," said Rick Wagoner, GM's chief executive. "We expect these challenging conditions will continue through 2009, and so we are accelerating our restructuring actions."
GM is planning to cut its eight major brands down to five, axing Saab, Hummer and Saturn. Saab filed for bankruptcy in Sweden last week, and workers at Vauxhall in the UK are braced for cuts.
The American group's restructuring plans have triggered protests across Europe. Some 15,000 Opel workers rallied yesterday at its German headquarters, demanding its parent company scrap plant closures. Unions and politicians in Sweden staged a protest at a Saab plant last night.
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