Bloomberg: GM Chopping Costs to Boost Cash Until Demand Revives

[Omaha Steve]

http://www.bloomberg.com/apps/news?pid=20601103&sid=anUAoRKEUcmU&refer=us

By Jeff Green

Jan. 11 (Bloomberg) -- General Motors Corp., buoyed by $4 billion in emergency loans, is “whacking” at its cost structure to withstand reduced demand and conserve cash, Chief Executive Officer Rick Wagoner said.

U.S. industrywide sales may run in the range of 10 million vehicles all year, Wagoner told reporters at the Detroit auto show today. Purchases plummeted to 13.2 million in 2008 after averaging about 16 million annually during the past decade.

Plans for the sale of the Saab unit are “moving along,” and GM has found interested parties, Wagoner said, without identifying prospective buyers. GM said Dec. 2 it is considering options for Saab and Saturn and will shrink offerings for Pontiac, expanding an earlier plan to sell Hummer.

Eliminating brands and dealers is part of GM’s plan to restructure its business in exchange for $13.4 billion in U.S. aid. The automaker is seeking concessions from its biggest union and is chopping debt in half because the government can call the loans should GM fail to show progress by March 31.

It’s premature to discuss how the biggest U.S. automaker might work with bondholders to win their assent in reducing debt, Wagoner said. Government loan conditions require Detroit- based GM to cut its unsecured public debt by at least two thirds in an exchange with bondholders for equity or other methods.

Focus on Cars, Trucks

Wagoner, 55, sought to shift GM’s message back to its products and away from its survival plan by parading 17 current and future cars and trucks through an invited crowd of about 600 employees, retirees and dealers at the North American International Auto Show.

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