GM Posts $30.9-Billion Loss for 2008, Second Biggest Ever
By Michelle Krebs February 26, 2009By Michelle Krebs
DETROIT -- As expected, General Motors announced Thursday morning a loss of $30.9 billion
for 2008, the second largest loss in the company's 100-year history -- second only to the $38.7 billion the automaker lost in 2007.
The worst came in the final quarter of 2008 when GM lost $9.6 billion, even more than analysts had predicted. During the fourth quarter, GM burned through $6.2 billion of cash.
GM is staying afloat only with the help of government loans, of which it is seeking more.
"2008 was an extremely difficult year for the U.S. and global auto markets, especially the second half," said GM CEO Rick Wagoner, who is in Washington, D.C., pleading the automaker's case this week for additional federal loans to President Obama's newly formed auto task force.
"These conditions created a very challenging environment for GM and other automakers, and led us to take further aggressive and difficult measures to restructure our business," Wagoner added.
Indeed, 2008 saw a dramatic deterioation in the global economy and decline in worldwide vehicle sales, negatively impacting virtually all automakers across the planet. Worldwide, GM sold 8.35 million vehicles in 2008, down 11 percent or more than 1 million vehicles from 2007.
As a result, GM said its revenues plunged to $149 billion in 2008, from $180 billion in 2007. Revenues generated from GM's automotive business totaled $148 billion in 2008, down from $178 billion in 2007.
In the fourth quarter, GM's revenues totaled $30.8 billion, a $16-billion drop from 2007's $46.8 billion in the quarter.
Staying Afloat With Government Help
GM would have been bankrupt in 2008 without government help. The U.S. government agreed to provide GM with $13.4 billion in loans, payable in three installments. The first $4 billion was provided to GM in December. Another $5.4 billion arrived on January 21 and the remaining $4 billion went to GM on February 17.
Still, GM is seeking more from the U.S. -- up to $16.6 billion more. In addition, GM has requested billions more from foreign governments as well.
Continued Restructuring
GM's Wagoner predicts the global economy will continue to be difficult this year. "We expect these challenging conditions will continue through 2009," he said in the company's statement. "So we are accelerating our restructuring actions."
To that end, GM announced in December a number of actions it was taking and special charges related to those actions were reflected in GM's fourth-quarter results.
Among them, GM took $1.1 billion in special charges related to Hummer and Saab. GM put Hummer up for sale and has talked to potential buyers, but Wagoner said recently the automaker will make a decision on Hummer's future by March 31. GM cut loose Saab, which filed for the equivalent of Chapter 11 reorganization in Sweden last Friday.
Further, GM said earlier this month it will eliminate 47,000 more jobs worldwide this year, close five more U.S. plants by 2012 and sell or close the Saturn brand. GM has cut salaried pay and is seeking concessions from union workers and bondholders.
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