Posted by: David Welch on November 5, 2008
Desperate times call for desperate measures. General Motors Corp. will announce some tough actions this Friday, Nov. 7, when the company announces its third quarter earnings. Losses are expected to be big since auto sales have taken such a big swoon.
An email sent out Monday said that Wagoner and COO Frederick A. “Fritz” Henderson will tell employees and Wall Street how the company will have to operate in the current environment, say sources who saw the email. With credit markets being extremely tight and the economy in recession, auto sales fell to their lowest level in 40 years.
GM will slash spending on new products in 2009. Sources in GM’s product development group say that nearly every product except a new Cadillac sedan that would compete head-to-head with a BMW 3-series in 2011 or 2012 have been delayed. Even key models like the Chevrolet Cruze compact and Malibu family sedan could be delayed, as BusinessWeek reported in this story on Oct. 23.
Clearly, GM is looking at every way possible to conserve cash. The company was burning $1 billion a month before third-quarter auto sales took a nose dive. During the last week of October, Vice Chairman Robert A. Lutz and GM’s top product planners met in a closed-door session that required attendees to sign confidentiality agreements.
Sources in the company say attendees have been tight lipped. Other engineers and product developers were left to speculate. The betting odds were that GM’s planners were either war gaming how it would fold Chrysler in to the company or cut spending. Maybe both. Bottom line: GM is scrambling to find a survival plan.