The world’s largest automotive manufacturer, General Motors, has reported first-quarter losses of R6,2 billion and GM shares have fallen in value by around 35 per cent this year.

The world’s largest automotive manufacturer, General Motors, has reported first-quarter losses of R6,2 billion and GM shares have fallen in value by around 35 per cent this year.


The losses suffered were the worst for General Motors since 1992 and were attributed to poor sales performance in North America, huge healthcare costs for employees and retirees, and decreased production, among other things, a report said.


The company has not offered share earnings guidance for the rest of the year, but indicated that full-year profits could be as much as 80 per cent lower than forecast. US credit ratings firms list GM shares at only one notch above junk bond status.


GM Europe lost R638,6 million in the first three months of 2005 - though that was R80,6 million less than last year. Sales fell by 5,1 per cent last month and market share is now down to 25,4 per cent, from 26,7 per cent this time last year.


GM has cut its workforce by a third over the past five years in North America, and 2 800 jobs have already been cut this year. Production will end at plants in Baltimore (Maryland), Linden (New Jersey) and Lansing (Michigan) later this year. quoted analysts as saying that there could be redundancies of up to 30 000 and the closure of four more US factories, as well as the killing off of Buick, and the future of Saab is not assured.


An industry website, , reported this week that "the speculation on Wall Street last week was how long it would be before General Motors declared bankruptcy," though it went on to say that "Wall Street can over-react both on the upside and on the downside, and the crisis of General Motors is probably not as imminent as investors seem to fear... it has a product renewal programme that gives it at least one more shot at stabilising its market share in its core market."


It went on to warn, however, that "it is difficult to see a long-term turnaround path for the group.