Merger talks between General Motors and Chrysler have been suspended in the wake of GM’s disastrous third-quarter financial results.
On the same day that Ford announced a looming gap in its liquidity GM has announced a loss of $2.5 billion (£1.6bn) over the last three months. Experts say GM won’t have enough money to complete its potential Chrysler merger and must rely on the US Federal Government for help.
Analysts suggest GM only has enough money to operate until the end of the year. Beyond that, the car giant’s liquidity will then fall short of its operating spend by June 2009, putting its future in grave jeopardy.
GM is blaming the global financial crisis for its position.
“Consumer spending, which represents close to 70 percent of the U.S. economy, fell dramatically,” said CEO Rick Wagoner, “the abrupt closure of credit markets created a downward spiral in vehicle sales.”
GM’s European wing – made up of Opel, Vauxhall, Chevrolet and Saab - posted a 15 percent loss in revenue compared with this time last year. GME’s revenue was £4.75bn compared with £5.6bn this time last year.
Worldwide, GM sold 2.1 million vehicles; 11 per cent fewer than the company sold in 2007.
There’s no word yet on what GM intends to do to improve its financial fortunes and bolster sales.
“The US government’s actions to eventually ease the credit crunch are an essential first step to the economy’s recovery” said Wagoner. “But further strong action is required,” insisted the GM boss.