GM Loses $1.6 Billion in Q3; 25,000+ Jobs to Be Cut by 2008
17 October 2005
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GM today reported a loss for the third quarter of $1.6 billion, including special items and an offsetting tax-rate adjustment. These results compare with net income of $315 million, or $0.56 per share, in the third quarter of 2004.
GM attributed the results, led by massive losses in its North American operations of $1.6 billion, to lower production volumes, continued increases in health care costs, higher material costs, and a shift in buyer demand mix away from full-sized sport utility vehicles.
To reduce its structural costs and stop the bleeding, GM and the United Auto Workers announced a tentative agreement early today that would reduce GM’s health-care costs significantly. GM also indicated that it would reduce its manufacturing employment by 25,000 or more jobs by 2008, while committing to full capacity utilization of its plants.
GM’s global market share in the third quarter dropped to 14.6% from 15.4% in the same period the year before. Market share in North America dropped sharply from 28.5% in the third quarter of 2004 to 25.6% for the same period this year.
The brightest spots in GM’s picture is GMAC, which continues to see its financial services businesses grow, and the Asia Pacific and Latin America, Africa and Middle east regions, both of which saw revenue and marketshare growth quarter to quarter.
| GM Third Quarter 2005 Select Results | ||||
|---|---|---|---|---|
| Entity | Net income ($ Million) | Market Share (%) | ||
| 3Q 2004 | 3Q 2005 | 3Q 2004 | 3Q 2005 | |
| Total Global Automotive Operations | -219 | -1,600 | 15.4% | 14.6% |
| North America | -88 | -1,600 | 28.5% | 25.6% |
| Europe | -236 | -150 | 9.4% | 9.3% |
| Asia-Pacific | 78 | 176 | 5.1% | 5.9% |
| Latin America, Africa, Middle East | 27 | 25 | 17.2 | 17.5 |
| GMAC | 620 | 675 | n/a | n/a |
Employee Pricing for Everyone! Except for these 25,000.
Posted by: Disgruntled | 17 October 2005 at 10:03 AM
Is it just me, or do the numbers not add up in that chart? Is the article saying the lost 1.6bn total? because that isnt what the chart shows.
Posted by: Dan | 17 October 2005 at 10:27 AM
It is a total loss of $1.6 billion, globally. Losses and gains for the different divisions are different. GMNA on its own lost $1.6 billion. The chart shows the total global loss (leftmost cluster), and the losses/gains of the different operating units.
Posted by: Mike | 17 October 2005 at 10:42 AM
Astonishing; 3% lost of the local USA market share in ONE year (from 28.5 to 25.6 and from 60%+ a few years ago. At that rate GM's market share will be almost meaningless in about 5 to 7 more years.
This manufacturer will have to be more innovative and produce what users can afford to drive if it really wants to be around much longer. The fuel cell car that GM is advocating may not be the proper answer for the next 10 years or so. GM may have taken the wrong turn by not paying more attention to more efficient hybrids and plug-in hybrids 8 to 10 years ago.
Pushing Hummers and other huge 4 x 4 gas guzzlers instead of smaller, lighter, more aerodynamic, more efficient hybrid vehicles did not help GM but it may not be too late to re-adjust. Catching up with Toyota and Honda will require major attitude changes. A jump to Plug-in Hybrids may do it.
Posted by: Harvey D | 17 October 2005 at 11:00 AM
Mike:
I agree with Dan about the funny math.
-1600-150+176+25+675=-874, not -1600.
So either the total is wrong, or GM North America is wrong. I think it should be emphasized that the GMNA total included one time charges of over $800 million, making that number look far lower than it should (and last years look better than it should, etc).
Posted by: stomv | 17 October 2005 at 11:07 AM
It’s not funny math, it’s accounting. Ooops, same thing.
Just kidding. The totals are correct. $1.6 billion total loss for global automotive operations...and that happens to be the SAME number for GMNA operations. Yes, that includes a non-cash charge of $805 million for asset impairments primarily in North America and Europe and restructuring charges at GM Europe of $56 million. These were also partially offset by a tax rate fiddling totaling $311 million.
The 1.6 billion sure looks worse than the 88 million loss in GMNA last year, same period, but THAT number also included a favorable one-time adjustment for product-liability reserves.
Without factoring in all the elements on the quarterly statement, the numbers aren't going to add up. But looking at the key components: automotive operations vs. GMAC, and within automotive operations the regional operational results, and then market share gives a pretty good view of the way things are going.
Posted by: Mike | 17 October 2005 at 11:48 AM
Seems like GM's bank is the only part of its business making money. How peverse is that? Maybe GM should get a loan from GMAC and let the accounting magic begin.
Posted by: Robert McLeod | 17 October 2005 at 12:21 PM
Ah, so the -1.6bn is the sum of more than just the regional breakdown numbers listed below it? So something else must have lost some money somewhere...
Posted by: Dan | 17 October 2005 at 04:19 PM
I think that if GM delays in developing hybrids or high milage vehicles, it will continue to lose customers. Customers drive the market and if customers need fuel efficient vehicles, it would be foolish for GM to continue offering vehicles that do not meet these needs. A large company like GM can adjust to changes in demands but if they do not do so, they have only themselves to blame. With continued demand for oil and rising prices of all fuels, it really is a matter of future survival for GM to make the necessary committment to change. In the animal kingdom, the equivalent would be environmental adaptation for the survival of a species.
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Posted by: Adrian Akau | 19 October 2005 at 11:10 PM
Hey folks, look where the tabs are placed... GMAC's total starts it's own new line and is not included in the global totals for the automaker division. If you total the regional numbers not including GMAC at all, you get the right totals.
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