General Motors Corp. (NYSE: GM) stock finished the day up nearly 11%, or $1.09 to $11.35 after two days of losses. It seems that overall sentiment for blue chip stocks was stronger today as buyers looked for bargains. With the recent slide in oil prices, including another decline today, many stocks previously hit by the runup in oil prices, like car companies, found themselves back in favor.But that's just the beginning. Ray Young, GM's chief financial officer, spoke with analysts Wednesday evening at a JPMorgan automotive conference, saying efforts are being made to speed up cost savings. GM, he said, may be able to reap more of the $10 billion in projected savings this year instead of in 2009.
With the faster savings, the plan to boost GM's liquidity seems more plausible, and the solvency problems less severe. Young's announcement came right after Moody's Investors Service lowered GM's credit rating, and seems it was indeed small comfort. Some analysts believe that the chance of a bankruptcy is lower than is priced in, despite balance sheet and operating concerns.
Young also said that "growth in emerging markets will continue to help offset losses in North America and new products will be cheaper to build." The question is whether with its current cash burn rate the cost savings would be enough.
Another way to raise cash would be to sell some assets, and indeed there have been reports GM had been in contact with Russian oligarch Oleg Deripaska on a possible sale of its Hummer brand. No doubt this would be a tough sell, but at least it would take the Hummer off GM's hands.
GM also said recently its Chevrolet Volt rechargeable car is still on schedule to go on sale as planned in 2010 and released a few teasers. If GM can survive until then, no doubt the Volt would help revive the auto giant.
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Reader Comments (Page 1 of 1)
8-14-2008 @ 6:23PM
gumbo koontz said...
GM and Ford can find addtional savings by asking Big Oil companies to offer deep discounts to Suvs and PickUps buyers . GM and Ford dont really need to do that themselves because they are losing money while Big Oil companies are still raking in profits!!! Where is Big Oil when GM and Ford is hurting for profits??? Quiet as usual!! So I want GM and Ford to stop offering deep discounts to buyers of Suvs and PickUps!!! They can go broke buying Suvs and Pickups without deep discounts so that they cant afford to buy as much gasoline as they want. This will be good for the rest of us... We dont care if they still want suvs and pickups as long as they dont get any deep discounts!! We are hard at work bringing gasoline prices down and they aint gonna spoil it @@
8-14-2008 @ 6:26PM
gumbo koontz said...
They can go to used markets to get themselves an old Suv or Pickup for all I care!! I dont care how long those spanking new Suvs and PickUps will sit in dealer lots!! the longer they sit there, the faster gasoline prices will come down!! dont you want $2 gasoline back again?? Yeah? well say no to deep discounts from gm and ford .. pay at manufactured suggested prices , period!! GM and Ford need to make money not give aways!!