Special items deepen GM loss

Special items of $9.1 billion contributed to General MotorsÔÇÖ $15.5 billion second quarter loss, the third biggest quarterly loss in its history, as US sales continued to plunge.  ┬á GM took a $3.3 billion charge for buying out the contracts of 19,000 hourly workers who left at the end of June, and $2.8 billion for its exposure to bankrupt former parts unit Delphi Corp. It also wrote off $1.3 billion because the falling price of used vehicles cut the value of leased automobiles owned by its financing unit, GMAC. ┬á┬á Without the one-off charges, GM said it would have lost $6.3 billion in the quarter, compared with a net profit of $891 million in the same period of 2007. ┬á┬á GM also cited continuing US volume declines and shifts in vehicle mix, and the long strike at American Axle as contributing factors. Revenue in the quarter fell to $38.2 billion from $46.7 billion a year earlier, accounted for entirely by the decline in North American sales. Combined revenues for the GM Europe (GME), GM Asia Pacific (GMAP) and GM Latin America, Africa and Middle East (GMLAAM) regions were $20.8 billion, up $1.7 billion over the same period of 2007.┬á┬á On 15 July, GM announced the latest stage of its restructuring plans, which include ceasing production at four truck plants and shift reductions at two other truck plants, but also the addition of shifts at two automobile plants, a new Chevrolet global small car program and next generation Chevrolet Aveo compact car, as well as the introduction of a high-efficiency 4-cylinder engine for US application.┬á┬á "As our recent product, capacity and liquidity actions clearly demonstrate, we are reacting rapidly to the challenges facing the US economy and auto market, and we continue to take the aggressive steps necessary to transform our U.S. operations," said GM chairman and CEO Rick Wagoner. "We have the right plan for GM, driven by great products, building strong brands, fuel-economy technology leadership and taking full advantage of global growth opportunities."┬á┬á GM is not the only company suffering from the state of the North American vehicle market. All automobile manufacturers are having to deal with reduced demand in the US as soaring gasoline prices and fears of a recession prompt many Americans to put off buying new vehicles.┬á┬á Earlier today BMW warned that its profits for 2008 would be below forecasts and predicted a "difficult" 2009. Nissan also reported a 42.8 percent fall in its three month profits today. Earlier this week, even Toyota scaled down its sales and productions plans for 2008.┬á┬á Read GMÔÇÖs financial statement here.┬á┬á  ┬á*┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á