Article: GM loses $11.4 billion

[blackSRi]

http://finance.news.com.au/story/0,10166,17953135-31037,00.html

From correspondents in Detroit
January 27, 2006

GENERAL Motors Corp has posted an $US8.6 billion ($11.46 billion) loss for 2005 in one of the most difficult years in its history.

Losses stemmed from a sharp drop in US demand for its highly profitable sports utility four-wheel drives and massive charges for restructuring and the bankruptcy of its former parts subsidiary, Delphi Corp.
GM, like Ford Motor Co, has recently announced huge job cuts and plant closures to combat a steady decline in market share in North America to Asian competitors.

GM has now scored five straight quarters of steadily mounting losses. This was the first time it has posted an annual loss since 1992.

While the world's largest carmaker vowed to improve its performance in 2006 and 2007, it would not forecast when it would return to profitability.

A number of analysts have warned that GM is at risk of declaring bankruptcy, and the company has seen its credit rating cut deeply into junk territory....

[PaulyJ]

I dont get it.
Here you sy they are at a loss, and a big one.
In another post it says that GM sold 9 million cars for 2005, second highest of something...
Where is the money going?

[oneightoo]

i was thinking the same thing pauly, actually i think anyone who has read both threads will be thinking the same thing..

[pred8r]

Somewhere i read, Ford has sold less cars in the US in 05 than in any of the the previous 5 years but it still made the same profit.

They shift the money around. If delphi went down that could easily have pulled them into debt, on paper, but the stock probably got sold off to GM prior to them bankrupting anyway eg. a piston bought by delphi for $10, is sold to GM for $1 prior to bankrupting, creates a $9 loss for delphi but is still a piston for GM (who owned delphi anyway).

Huge companies rarely go broke accidently, they are made to go broke for a reason. We humble manservants would be lucky to comprehend the whats and whys of big business.

[bill142]

Somewhere i read, Ford has sold less cars in the US in 05 than in any of the the previous 5 years but it still made the same profit.

They shift the money around. If delphi went down that could easily have pulled them into debt, on paper, but the stock probably got sold off to GM prior to them bankrupting anyway eg. a piston bought by delphi for $10, is sold to GM for $1 prior to bankrupting, creates a $9 loss for delphi but is still a piston for GM (who owned delphi anyway).

Huge companies rarely go broke accidently, they are made to go broke for a reason. We humble manservants would be lucky to comprehend the whats and whys of big business.

Ford aren't doing much better. They posted a pretty big loss recently and have started to restructure just like GM have. GM are still responsible for the pension plan for Delphi, even tho they were cut loose sometime ago.

On the postive side, the US has bankruptcy protection laws. All they have to do is file for Chapter 11 bankruptcy protection and restructure. United Airlines has been abusing Chapter 11 for years, and theres nothing to suggest that Ford and GM won't do the same.