GM motors has given warning well in advance that there is a likelihood of their running out of cash unless the government intervenes with some remedial measures. The weakening market conditions need to be reversed. It also indicated after its talks with No. 2 Chrysler LLC it was ready to take boosting measures. It was even ready to make an extra cut of $5 billion in order to accumulate cash.
This is one of the gloomiest warnings issued by GM motors, which is the largest auto manufacturer. It shows the desperate struggle of automakers to counter the failing sales in Europe and North America. GM motors fear that without external intervention or increase in sales it might just burn through$6.9 billion in the September quarter. It hopes the congress would help it in the lame duck session in order to avoid bankruptcy.
The chances of it recovering under its own steam or due to increased sales are bleak. The company has reported a net loss of $2.5 billion for the first quarter. GM shares fall down 66cents.
It will look to raise an additional $5 billion in cash, in addition to the earlier $15 billion it previously said it planned to raise. GM is now planning for U.S. auto sales of 11.7 million cars and trucks in 2008 and 12.7 million in 2009, down from the 14 million it planned on in June
“The U.S. government’s actions to help stabilize the credit markets and eventually ease the credit crunch are an essential first step to the economy’s and the auto industry’s recovery, but further strong action is required,” said Wagoner in a statement.
