GM ponders dumping brands
The automaker reportedly is speeding small-car output, ready to cut white-collar jobs.
DETROIT - General Motors Corp. may get rid of some brands, speed the introduction of small cars, and make further white-collar job cuts as it tries to deal with a shrinking U.S. auto market.
A person familiar with the company's discussions said yesterday that all the options were being considered as GM tried to cope with the dramatic shift in consumer buying habits from trucks to cars and crossover vehicles.
The person asked not to be identified because no decisions have been made.
GM shares dropped briefly yesterday afternoon to $9.92, near their lowest point since Sept. 13, 1954, according to the Center for Research in Security Prices at the University of Chicago. The price is adjusted for splits and other changes.
Later in the afternoon, the stock rebounded and rose 12 cents to close at $10.24. It has traded as high as $43.20 in the last year.
GM announced last month that it would close four truck and sport utility vehicle plants and boost production of several current car models. Its sales are down 16.3 percent this year.
Further job cuts could be considered by GM's board of directors when it meets in early August, the Wall Street Journal reported yesterday.
Company spokeswoman Renee Rashid-Merem would not comment on potential job or brand cuts, but said the company has made it clear that action would be taken if the U.S. auto market worsened.
GM's stock price tumbled to its previous 53-year low of $9.96 Wednesday after Merrill Lynch analyst John Murphy wrote in a note to investors that a GM bankruptcy "is not impossible if the market continues to deteriorate and significant incremental capital is not raised."
The next day, JPMorgan Chase & Co. analyst Himanshu Patel called the bankruptcy fears overblown, but predicted GM would burn through $18 billion in 2008 and 2009 as it struggled with depressed U.S. sales.
Critics have said GM still has too much fat in its middle management, despite cutting white-collar employment to 32,000 last year from 44,000 in 2000. They also say the engineering, manufacturing and marketing costs are too high for it to keep all eight of its brands.
Over the years, analysts have suggested cutting or selling the Buick, Saab or Saturn brands, perhaps jettisoning them as GM did with Oldsmobile in 2004. Chevrolet and Cadillac remain the company's strongest sellers.