GM to Bolster Cash Reserves with $16 Billion Credit Line and Austerity Measures

The automotive world is headed into a tumultuous period, so GM is preparing itself by trying to have as much cash on hand as possible.

“We are aggressively pursuing austerity measures to preserve cash and are taking necessary steps in this changing and uncertain environment to manage our liquidity, ensure the ongoing viability of our operations and protect our customers and stakeholders,” Mary Barra, GM’s chief executive officer, said in a statement.

Its first step will be to tap into its credit lines to have as much cash in its proverbial pocket as possible. Along with roughly $15 billion it expected to have anyway, GM should have more than $30 billion to spend by the end of the month.

In concert with strict austerity measures, GM hopes that will see it through the worst of the fallout from the coronavirus. Bloomberg reports that the number should be enough to see the automaker through 21 weeks without production.

GM’s plan to reopen its factories on March 30 still stands, but with Ford having admitted that its plants will stay closed longer there is some question as to whether or not the shut down will last longer.

Ford preceded GM in tapping into its credit lines, but unlike Ford, GM will continue to pay out its dividend. This, says analysts, is a sign of GM’s confidence in its own financial position and may play well with investors.

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