General Motors announced stepped-up cost-cutting plans on April 27 that include an additional 7,000 to 8,000 production job cuts and the phasing out of the Pontiac brand.
The automaker, which is working on a new viability plan to get an extension of U.S. government aid, also said it would seek to restructure $27 billion in debt by offering a swap of common stock for bonds. GM said these and other actions would "speed the reinvention of GM's U.S. operations into a leaner, more customer-focused, and more cost-competitive automaker."
"We are taking tough but necessary actions that are critical to GM's long-term viability," said Fritz Henderson, CEO, GM. "Our responsibility is clear -- to secure GM's future -- and we intend to succeed. At the same time, we also understand the impact these actions will have on our employees, dealers, unions, suppliers, shareholders, bondholders, and communities, and we will do whatever we can to mitigate the effects on the extended GM team."
GM said it would phase out the Pontiac nameplate by the end of 2101 and focus on four core brands in the U.S. -- Chevrolet, Cadillac, Buick and GMC.
The revised plan seeks to find a buyer or phase out the nameplates Saab, Saturn, and Hummer by the end of 2009, at the latest.
These actions would reduce GM's US dealer network from 6,246 in 2008 to 3,605 by the end of 2010, a reduction of 42% -- a further reduction of 500 dealers, and four years sooner, than in its February 17 plan.
"This reduction in U.S. dealers will allow for a more competitive dealer network and higher sales effectiveness in all markets," a GM statement said.
GM said that under the latest plan, it could break even in the North American market with an industry volume of 10 million total vehicles. "This rate is substantially below the 15 to 17 million annual vehicle sales rates recorded from 1995 through 2007," GM said.
Copyright Agence France-Presse, 2009