The current financial woes of General Motors are no secret these days, with the Detroit 3 carmaker admitting recently that it will run out of cash early next year without the help of a federal loan. Despite the seriousness of the situation, as well as new polls that show the public is in favor of an automotive bailout, there still remains the distinct possibility that the government will reject these loan applications - in which case GM must be prepared with a backup plan to keep its head above water until President-elect Barack Obama enters the White House in January.
Currently, GM is undertaking a number of measures to keep its cash flows at an acceptable rate, however with around $12.5 billion required at any time to keep the company operational these measures may have to be stepped up to avoid going bankrupt, reports Automotive News.
GM has already declared that it won't be selling any more brand assets apart from Hummer, however this doesn't mean the company can't sell other physical or financial assets such as inefficient manufacturing plants and stakes in other companies. Just recently, GM sold its remaining 3% stake in Japan’s Suzuki, earning roughly $230 million for the parcel of shares on the open Tokyo stock market.
To maintain liquidity, GM will also be delaying the introduction of new models. Earlier, we reported on GM being forced to postpone the Cadillac CTS Coupe and the Buick LaCrosse due to the high costs.
The carmaker will also temporarily suspend matching payments into its employees’ 401(k) accounts as it struggles to raise liquid cash. The suspension of matching contributions will come into effect on November 1 this year, and will affect GM's entire North American workforce. Additionally, GM is reported to be evaluating the number of salaried workers it employs, with a view to lay off up to 5,000 employees in order to drastically cut its costs.
GM is expected to make an announcement regarding its chances of success following Thanksgiving.