GM Europe and the Opel Supervisory Board have approved a confidential long-term plan for viability that will be submitted to government representatives in the coming days.
The confidential document includes a funding request for €3.3 billion (US$4.2 billion) in government support (German and other governments), €3 billion (US$3.8 billion) in support from GM and $1.2 billion (€0.95 billion) in structural cost reductions as outlined in GM’s latest version of its viability plan submitted to the US Congress.
In that document, GM said that it has engaged its European labor partners to achieve the $1.2 billion in cost reductions, which include several possible closures/spinoffs of manufacturing facilities in high cost locations. In addition, GM is restructuring its sales organization to become more brand focused and better optimize its advertising spend. GM said that a sustainable strategy for its European operations may include partnerships with the German Government and/or other European governments. GM expects to resolve solvency issues for its European operations prior to 31 March 2009.
Through the restructuring and using conservative market assumptions, GM Europe/Opel projects profitability by 2011.
Approval of the document came shortly after GM reported a net loss for 2008, including special items, of US$30.9 billion, and a fourth quarter 2008 net loss of $9.6 billion. The adjusted net loss for 2008 was $16.8 billion, with an adjusted fourth quarter loss of $5.9 billion.
GM total revenue in 2008 was $149 billion, down 17.2% compared with $180 billion in 2007. GM’s core automotive business generated revenue of $148 billion in 2008, down from $178 billion in 2007. The revenue decline was predominantly due to the precipitous drop in sales amid record low consumer confidence in the US and sharply lower sales across all of GM’s operating regions due to economic turmoil in the global markets. Global industry sales in 2008 were down 5%, or 3.6 million vehicles, versus 2007 levels, and US industry sales fell by 18%, or nearly 3 million units.
GM’s global automotive operations posted an adjusted loss before tax of $10.4 billion in 2008 (reported loss of $16.3 billion), compared to adjusted income before tax of $553 million in 2007 (reported loss of $1.9 billion). In the fourth quarter 2008, GM’s automotive operations had an adjusted loss before tax of $4.0 billion (reported loss of $6.4 billion), compared to an adjusted loss before tax of $803 million in the year-ago quarter (reported loss of $1.2 billion).
GM 2008 worldwide sales were 8.35 million vehicles, down 11%, or 1.01 million vehicles, driven by the industry-wide contraction in global vehicle sales. In 2008, 5.38 million vehicles, or 64% of GM’s global sales, were outside of the US, up from 59% a year ago.