General Motors Corp. Chief Executive Rick Wagoner dismissed the notion that the auto maker may soon file for bankruptcy, and he also said the company has no plans to sell or shutter more of its brands."Under any scenario we can imagine, our financial position, or cash position, will remain robust through the rest of this year," Mr. Wagoner said Thursday while in Dallas to speak to a business organization. He said the company has plenty of options to shore up its finances beyond 2008, although he declined to outline them.
The comments failed to boost investor sentiment as GM shares fell 6.2% to $9.69 in 4 p.m. New York Stock Exchange composite trading Thursday. The stock has been trading at its lowest levels in more than 50 years as concerns mount about the company's financial position amid a steep decline in U.S. sales.
GM and other U.S. auto makers are reeling as the slow U.S. economy depresses sales and as high gasoline prices push many would-be buyers to small, more-fuel-efficient vehicles and away from the higher-margin SUVs and trucks. Through June, for instance, GM's U.S. sales slipped 16%, more than offsetting strength in overseas markets.
GM has about $24 billion in cash but is burning an estimated $3 billion a quarter, prompting talk that it will need a significant cash influx to get to 2010.
"We have no thought of [bankruptcy] whatsoever," Mr. Wagoner said in response to an audience question during the Dallas event.
But he noted the widespread discussion of such a possibility could itself hurt sales, because consumers may balk at buying a vehicle from a company they think could go under. "The rumors of it don't help anything and are completely inaccurate," Mr. Wagoner said.
Meanwhile, Mr. Wagoner said GM has no plans to further reduce its number of brands. The company recently put its iconic Hummer division up for sale.
GM sells vehicles under eight different brands, but most -- including Buick, Saturn and Saab -- struggle to attract buyers.
Mr. Wagoner said GM has plenty of initiatives under way to develop more fuel-efficient vehicles, such as the Chevrolet Volt, a plug-in hybrid he said should be in showrooms by the end of 2010.
By: Bob Sechler
Wall Street Journal; July 11, 2008
