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    GM Not Seeing Signs of U.S. Recovery, Wagoner Says

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    GM Not Seeing Signs of U.S. Recovery, Wagoner Says

    Post by sang_garuda on Sun Aug 17, 2008 7:05 am

    Aug. 16 -- General Motors Corp. Chief Executive Officer Rick Wagoner said he's not yet seeing signs of a recovery in the U.S. economy or in vehicle sales following the recent decline in oil prices.

    ``It still feels to me like we're in it,'' the CEO of the world's largest automaker said, referring to the sluggish economy that helped push GM to $15.5 billion in losses in the second quarter. He was speaking at the Athens Coney Island restaurant in Royal Oak, Michigan, after leading a morning parade of classic GM cars from the past 100 years.

    Wagoner is trying to increase cash by at least $15 billion before the end of next year to pay the bills while he works to recover sales lost to Toyota Motor Corp. and Honda Motor Co. GM's U.S. market share is the lowest since 1925 and the Detroit automaker has lost $69.8 billion since 2004, its last profitable year.

    The automaker may seek to modify the structure of financing necessary to create a fund in 2010 to rid itself of future union retiree health-care costs, Wagoner said today. GM already reached an agreement to delay some cash payments and other cash payments might be modified, without delaying the implementation of the fund, he said. GM Chief Financial Officer Ray Young also said Aug. 13 that GM may need to restructure the financing of the fund that will save GM $3 billion a year after 2010.

    ``I wouldn't rule it out if it made sense for everyone to look at that,'' Wagoner said.

    $4 a Gallon

    Union members at GM agreed last October to let the carmaker pay $31.9 billion into a Voluntary Employee Beneficiary Association, or VEBA, to cover a $47 billion health-care liability. A U.S. judge in Detroit on July 31 granted final approval of the plan, barring any appeals.

    Young said this week that GM is trying to speed up $10 billion in cuts this year after economic conditions worsened.

    Gasoline prices that topped $4 a gallon in the U.S. this year have soured U.S. buyers on GM trucks, which make up a majority of domestic sales.


    Wagoner dismissed talk that GM is buckling under the losses of the past several years. The majority of the costs are composed of $11 billion to bail out its bankrupt former unit Delphi Corp., more than $30 billion for a tax-accounting charge and $15 billion-$20 billion to close plants and buy out union workers, he said.

    ``We're structured to be very competitive in the future,'' Wagoner said, surrounded by classic GM cars from the 1960s and other halcyon days of the company's past. ``Anybody who is writing off General Motors isn't looking at the facts and is probably hoping, because they'd better watch out.''

    GM has had three of its highest volume sales years during its 100-year history in the past three years, Wagoner said. The automaker is growing faster than competitors in markets such as Russia and holds a dominant position in most of the fastest- growing regions, he said.

    GM beat Toyota by about 3,000 units last year to retain the title as the world's biggest automaker. Through the first half of this year, Toyota leads by 278,000 units globally.

    Wagoner declined to comment on how GM will react to a Pension Benefit Guaranty Corp. letter this week asking GM to assume pension liabilities from Delphi by the end of September or risk bearing additional costs from its bankrupt former auto-parts subsidiary.

    ``We've said from the very beginning that as part of a solution to Delphi that it make sense for us to support that area, so we kind of hope things can come together because that makes a lot of sense to us,'' Wagoner said today.

    Shares of GM fell 17 cents to $11.18 in New York Stock Exchange trading yesterday. The stock is down 55 percent in the year to date.

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    Re: GM Not Seeing Signs of U.S. Recovery, Wagoner Says

    Post by Prodip2007 on Sun Aug 17, 2008 10:20 am

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