GM Not Seeing Signs of U.S. Recovery, Wagoner Says

[steinravnik]

GM Not Seeing Signs of U.S. Recovery, Wagoner Says



Aug. 16 (Bloomberg) -- General Motors Corp. Chief Executive Officer Rick Wagoner said he's not yet seeing signs of a recovery in the U.S. economy or in vehicle sales following the recent decline in oil prices.

``It still feels to me like we're in it,'' the CEO of the world's largest automaker said, referring to the sluggish economy that helped push GM to $15.5 billion in losses in the second quarter. He was speaking at the Athens Coney Island restaurant in Royal Oak, Michigan, after leading a morning parade of classic GM cars from the past 100 years.

Wagoner is trying to increase cash by at least $15 billion before the end of next year to pay the bills while he works to recover sales lost to Toyota Motor Corp. and Honda Motor Co. GM's U.S. market share is the lowest since 1925 and the Detroit automaker has lost $69.8 billion since 2004, its last profitable year.

The automaker may seek to modify the structure of financing necessary to create a fund in 2010 to rid itself of future union retiree health-care costs, Wagoner said today. GM already reached an agreement to delay some cash payments and other cash payments might be modified, without delaying the implementation of the fund, he said. GM Chief Financial Officer Ray Young also said Aug. 13 that GM may need to restructure the financing of the fund that will save GM $3 billion a year after 2010.

``I wouldn't rule it out if it made sense for everyone to look at that,'' Wagoner said.

$4 a Gallon

Union members at GM agreed last October to let the carmaker pay $31.9 billion into a Voluntary Employee Beneficiary Association, or VEBA, to cover a $47 billion health-care liability. A U.S. judge in Detroit on July 31 granted final approval of the plan, barring any appeals.

Young said this week that GM is trying to speed up $10 billion in cuts this year after economic conditions worsened.

Gasoline prices that topped $4 a gallon in the U.S. this year have soured U.S. buyers on GM trucks, which make up a majority of domestic sales.

Delphi

Wagoner dismissed talk that GM is buckling under the losses of the past several years. The majority of the costs are composed of $11 billion to bail out its bankrupt former unit Delphi Corp., more than $30 billion for a tax-accounting charge and $15 billion-$20 billion to close plants and buy out union workers, he said.

``We're structured to be very competitive in the future,'' Wagoner said, surrounded by classic GM cars from the 1960s and other halcyon days of the company's past. ``Anybody who is writing off General Motors isn't looking at the facts and is probably hoping, because they'd better watch out.''

GM has had three of its highest volume sales years during its 100-year history in the past three years, Wagoner said. The automaker is growing faster than competitors in markets such as Russia and holds a dominant position in most of the fastest- growing regions, he said.

GM beat Toyota by about 3,000 units last year to retain the title as the world's biggest automaker. Through the first half of this year, Toyota leads by 278,000 units globally.

Wagoner declined to comment on how GM will react to a Pension Benefit Guaranty Corp. letter this week asking GM to assume pension liabilities from Delphi by the end of September or risk bearing additional costs from its bankrupt former auto-parts subsidiary.

``We've said from the very beginning that as part of a solution to Delphi that it make sense for us to support that area, so we kind of hope things can come together because that makes a lot of sense to us,'' Wagoner said today.

http://www.bloomberg.com/apps/news?p...d9E&refer=home

[mgescuro]

Of course there is "no end" to this "economic funk."
This has only just begun.

Poor GM.

[stormwatcher]

And Delphi is like a nightmare that never ends.

[mgescuro]

Originally Posted by stormwatcher

And Delphi is like a nightmare that never ends.

That's what I don't get.
Why is GM still nursing Delphi??? It's been over 10 years since they were spun off!!?? Can't they find a way to stand on its own?

Delphi can't keep sucking on its mother's teat when there's no milk left.

[MrMax]

These certainly are realistic comments from Wagoner given the current circumstances. I hope 2008 can end without another $5+ billion loss though... I must say I'm not overly optimistic about that happening.

However, if for the remainder of the year they lose less than $10 billion, I think they can survive. If they lose more than that, I don't know...

[stormwatcher]

GM must have had to promise a lot of things to the UAW to allow GM to spin Delphi off. But after 10 years GM's obligations should be finished. Instead it just keeps getting worse.

[logansowner]

I'm telling ya, to work at the top of GM you need documented proof of being "full retard". An intelligent person with management skills need not apply.

[nimrod]

a global recession is underway. GM better adjust to that.

[bobojay]

Originally Posted by stormwatcher

GM must have had to promise a lot of things to the UAW to allow GM to spin Delphi off. But after 10 years GM's obligations should be finished. Instead it just keeps getting worse.

GM didn't promise anything to the UAW to spin off Delphi. They just did it. Put it's worst managers, (Battenburg & his crew), in charge of it, and it's come back to bite them big time.
More POOR, short sighted decisions that were made in this fiasco.
Battenburg was later in big trouble with the government for doing some funny money things at Delphi.
Not to mention, ruining a decade plus of excellent labor relations GM had built up with it's various parts units.

[A.J.]

Finally, he admits it...

GM desperately needs good product over here in the US...no matter how much it will cost consumers. If it's a good car, they'll buy it. Believe me, I almost always see a fully-loaded Honda Accord in a Wal-Mart parking lot.

What we need now
Insignia, Cruze, G8 Sportwagon, Meriva, Beat...

Should I go on?

[jbernie]

The big question is how good/bad they perform between now and when the labor costs are off the books, GM is a big case of "if onlys", "if only" the economy had help up for another year or so, "if only" gas prices spiked in about a year....

If what we have now happened at the end of 09 there would be less concern as a lot of costs would be disappearing fast without them needing to do anything. Getting these costs out of the way now however when there is lots of bad news isnt all bad, should GM make it to 2010 in a somewhat healthy position then the finanicials should be getting better much quicker as pretty much all the bad news has occured.

Not something that is a sure thing obviously, we just need GM to get to the light at the end of the tunnel before the next train comes

[Z28x]

The Second great depression hasn't even started yet. IMHO 2010 will be the worse year.

[skylark68]

Originally Posted by mgescuro

That's what I don't get.
Why is GM still nursing Delphi??? It's been over 10 years since they were spun off!!?? Can't they find a way to stand on its own?

Delphi can't keep sucking on its mother's teat when there's no milk left.

Maybe Delphi needs a new wet-nurse...

[Ambalanche]

Originally Posted by steinravnik

GM Not Seeing Signs of U.S. Recovery, Wagoner Says



``We're structured to be very competitive in the future,'' Wagoner said, surrounded by classic GM cars from the 1960s and other halcyon days of the company's past. ``Anybody who is writing off General Motors isn't looking at the facts and is probably hoping, because they'd better watch out.''

GM has had three of its highest volume sales years during its 100-year history in the past three years, Wagoner said. The automaker is growing faster than competitors in markets such as Russia and holds a dominant position in most of the fastest- growing regions, he said.

GM beat Toyota by about 3,000 units last year to retain the title as the world's biggest automaker. Through the first half of this year, Toyota leads by 278,000 units globally.

These are the most troubleing statements to me. The fact that GM says they are "structured to be very competitive in the future". I hope so. Will you make it that long? GM has had three of it's highest volume sales years in the past three years. And they still can't make money! and the fact that GM barely hung on last year for the largest automaker title. Is that last figure correct? Toyota leads by 278,000 Units??? Wow!

[tgagneguam]

Originally Posted by Z28x

The Second great depression hasn't even started yet. IMHO 2010 will be the worse year.

This is just plain fearmongering, and you know it. The country has been through recessions before, we've been through periods of high energy prices, flat stock markets, tough housing markets, and tight credit. We've been through times where the global economy was struggling. And frequently, none of this even came close to a depression. Keep investing in the market, keep paying down your mortgage, and you'll be just fine.

Originally Posted by mgescuro

That's what I don't get.
Why is GM still nursing Delphi??? It's been over 10 years since they were spun off!!?? Can't they find a way to stand on its own?

Delphi can't keep sucking on its mother's teat when there's no milk left.

Funny, it's for similar reasons that the government nursing GM won't work either. At some point a company needs to sink or swim. That applies to Delphi, and that applies to GM. You don't keep throwing money at Delphi in the hope that "oh, now they're really gonna get it. Now they're gonna finally spend the money appropriately on a strong business model." It's been nine years too long that GM's been supporting this sloth.

``Anybody who is writing off General Motors isn't looking at the facts and is probably hoping, because they'd better watch out.''

This is such empty rhetoric. No company is really heeding these words with any great amount of fear. Sort of like Bush's big tough-guy talk toward the Russian Bear: "You better get out of Georgia, or you're gonna be really sorry." And yet, Russia continues to thumb its nose at the world. Empty threats, GM, empty threats.