16 Jul 2008

More cuts at GM

3:38 pm on 16 July 2008

General Motors has announced it will cut white collar employment costs by 20% to counteract falling sales.

GM also said it would sell as much as $US4 billion of assets, and borrow about $US2b to bolster its finances.

The largest US carmaker said it would also suspend its common stock dividend.

GM and other carmakers are under pressure because of high fuel prices and a dip in demand for larger cars such as sports utility vehicles (SUVs).

In the first half of 2008, truck sales sank 21%, while overall sales fell 16%.

GM is the US's top-selling carmaker, but its share price is down by more than 60% to date this year. Last week the share price reached its lowest level in more than 53 years.

Chief executive Rick Wagoner said he was confident that the new plans would give the company the boost it needed for the future.

GM expects that the measures will free up about $US15b by the end of 2009.

Last month, GM announced the closure of four truck and SUV factories in North America and Mexico, and said it would increase production of smaller more fuel-efficient cars.