General Motors could need further $16bn (£11.2bn) in government loans to prevent it collapsing, according to the ‘viability plan’ handed to US treasury on Tuesday evening.
When added to the $13.4bn (£9.4bn) GM has already received, the total cost of preventing the car maker failing could reach a massive $30bn (£21bn).
GM, the world’s second largest car maker, has said it will definitely need $22bn (£15.4bn) in government loans, but if the US car market deteriorates further in 2009 it will need an additional $7.5bn (£5.25bn). GM says that it will start to repay the loans from 2012.
The company is slashing a total of 47,000 jobs globally this year and, by 2012, will have closed another 14 of its factories. It will also reduce its number of dealerships from 6200 to 4100 by 2014.
When asked how GM had got into such a serious financial situation, Rick Wagoner, GM Chairman and CEO, said that aside from the global collapse in car sales, GM had needed to spend $103bn (£72bn) on “post-retiree costs” over the past 15 years.
Wagoner also ruled out bankruptcy and restructuring for GM as “risky, costly and time consuming”.
GM also made clear that it wants help from the German, Canadian and Swedish governments to help prop up its overseas divisions during the global downturn.
Discussions with the German government over bailout funds for Opel are “ongoing” but “far from a final resolution” according to Wagoner. He would not comment on reports that at least two Opel factories could be closed.
It is expected that German unions and some German politicians will lobby hard for the German state to take a stake in Opel. GM bosses at the Detroit press conference did not discuss the fate of Vauxhall’s two UK manufacturing sites.
As part of its cull of loss-making brands, General Motors said that the Saturn brand will be wound down by 2011 and that a decision over the sale or closure of Hummer would be made by the end of March.
Saab’s position appears perilous. In the viability plan submitted to the US treasury, GM says it wants “Swedish government support prior to any sale” because the company is planning to “cap the financial support” it offers to loss-making Saab.
Nevertheless, GM also says the Swedish car maker will “effectively become an independent business entity” by 1 January 2010.
Rick Wagoner told Autocar that GM would still sell its technology – such as platforms and engines - to Saab if it survives as independent company.
He also said they would do the same for Opel, suggesting that GM could envisage Opel becoming a semi-detached division.