GM to cut brands, slash jobs
GM's response came after the Wall Street Journal reported Monday that the Detroit automaker is reviewing plans to eliminate another brand, possibly Saturn, as part of a larger cost-cutting strategy. In a letter sent to dealers the same day, Mark LaNeve, GM's vice president for North America vehicle sales, said no such plans are in the works.
"Similar to the Hummer situation we would communicate with you, our dealers, very early in the process if this was the case," he wrote. "In this challenging period that our industry is going through, there is bound to be lots of media coverage, speculation and rumors. The best way to combat (that) is through strong sales performance and a focus on our customers." On June 3, GM announced that it had retained Citibank to conduct a review of the Hummer brand for a possible sale. Sales of the gas-guzzling brand are down 40 percent so far this year, according to Autodata Corp. GM's overall vehicle sales are down 16.3 percent so far this year. LeNeve's letter is the second memo from a top executive in recent weeks intended to calm concerns in a tumultuous market. Late last month, CEO Rick Wagoner wrote to employees about GM's plans to fight against the headwinds of rising gas prices and slumping auto sales.
"We're responding quickly and aggressively with a steady stream of actions to better position GM for sustainable profitability and growth," he wrote. Wagoner then outlined plans previously announced June 3 at GM's annual meeting, including the Hummer review, a new global compact car program, funding for the Chevrolet Volt range extended electric vehicle and the closing of four truck plants in response to sagging sales. Detroit News
07/08/08 General Motors Corp. said Hummer is the only one of its eight U.S. brands being formally reviewed for a possible sale or shutdown as the automaker's domestic market share falls to an 83-year low.
The Wall Street Journal reported today that the biggest U.S. automaker may sell or scrap more brands and its directors will likely approve the elimination of thousands of additional salaried jobs at next month's board meeting.
GM spokesman Tony Cervone wouldn't comment on possible job cuts and said no brands are under “strategic review'' beyond Hummer. Detroit-based GM said June 3 it's studying all options for the Hummer sport-utility line, including a sale.
“It's still a huge expense to get rid of a brand,'' said Alan Baum, an analyst for Planning Edge in Birmingham, Michigan. “There are dealer issues and legal issues.'' Bloomberg
07/07/08 General Motors the No. 1 automaker in the U.S., is planning to cut thousands of white-collar jobs and is considering whether it should sell or stop production of more of its brands, The Wall Street Journal said, citing people familiar with the matter. Both moves are part of a broader re-evaluation of the company's strategy and of its ability to meet an internal projection of returning to profitability in 2010, the people told the paper.
The job cuts are likely to be approved when GM's board of directors meets in early August, the people said. The reductions would be in addition to earlier announced cuts.
Management may also present the board with options for raising additional cash, they told the paper.
The board may also hear management's latest thoughts on whether GM should trim the number of brands it offers in the United States, the people told the paper.
All but the Cadillac and Chevrolet brands, which GM considers core to its business, are undergoing close scrutiny, some other people told the paper.
In the past few years, as GM has run up massive losses, some board members and some executives have on occasion raised questions about its plethora of brands, only to be rebuffed by chief executive Rick Wagoner, the paper said, citing people familiar with the matter.
GM has put its Hummer brand up for sale to prospective buyers thought to include Mahindra & Mahindra, but the SUV brand is expected to fetch far less than $1 billion in any sale.
The company, hit by rising oil and raw material prices, the credit crunch and the housing downturn, will need to raise as much as $15 billion in cash to shore up liquidity and bankruptcy is "not impossible" if the U.S. auto market continues to slump, Merrill Lynch had said last week. Wall Street Journal/CNBC