November 11, 2008
General Motors is in such dire financial straights that it needs to line up a federal aid packaged before president-elect Barack Obama takes office in January, the automaker’s chief executive said Monday.
“This is an issue that needs to be addressed urgently,” Wagoner told Automotive News, adding that now is the time to “overshoot, not undershoot” the level of assistance.
- A d v e r t i s e m e n t
GM is willing to offer the government preferred stock, speed the introduction of fuel-efficient vehicles and set limits on executive compensation in exchange for financial aid, Wagoner said.
But Wagoner did not think it would be “a very smart move” for him to resign.
“It’s not clear to me what purpose would be served” Wagoner said. “I think our job is to make sure we have the best management team to run GM.”
On Friday the biggest US automaker warned it would run out of cash in the first half of next year and appealed to the US government for help to save it from collapse.
The company announced a third-quarter loss of 2.5 billion dollars and said it had burned through another 6.9 billion of cash during the three-month period, leaving it with cash reserves of 16.2 billion.
GM has said it needs cash reserves of between 11 and 14 billion dollars to cover the cost of its operations.
Wagoner said that while the company’s cash burn in the fourth quarter should ease to one billion dollars a month, it will likely not be able to survive without government help.
GM has developed a turnaround plan which assumes that sales fall to 11.7 million vehicles next year from recent averages of around 15 million a year.
“I’d question whether the US industry as a whole could survive that without support,” Wagoner said, adding that even with government help the automaker will have to do “significantly more restructuring” if industry sales stay that low.