Stocks of the two big U.S. automakers sink again as they face new questions about cash and credit

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by David Welch

Just three months gone, General Motors (GM) Chairman and CEO Rick Wagoner related he was moving to secure $15 billion in pay in money through asset sales, borrowing, and cost cuts that would see the gang through to 2009 even in the worst of times.

Barely three months later, with its stock trading at a 54-year low, GM is looking for to a greater degree ways to husband cash. The grim market conditions that underpinned its liquidity plan weren’t downbeat enough, it turns out. Several sources inner part the company say GM is looking at product delays to save cash, hoping the company have power to weather the weak frugality and liquidity crisis and make it through to 2010.

All but essential programs are at least getting a review, the sources said. Even the next-generation Chevrolet Malibu could be on the plain. GM wants each of its cars to beget a makeover every 5½ years, but it may have to stretch that to 7½ years for some models to stay in the outrageous. A GM spokesman says the social meeting is delaying some drudge programs but that nothing major has been held up yet.

The arbitrament of the sword gaming around cash savings shows reasonable how tough times have become toward Detroit’s Big Three. On Monday, Oct. 6, GM’sitting shares fell 52¢, or nearly 6%, to 8.48, its lowest estimation since 1954, according to Bloomberg Financial Markets. Ford Motor (F) garner fell 36¢, or 9%, to 3.69, its lowest since 1984. GM, Ford, and Chrysler have had their credit ratings downgraded to the degree that they burn cash and sales plummet. Last month, every major automaker—except GM, which had a arrogant sluggard of sales to rental fleets and a fire sale—saw sales drop at least 20% (BusinessWeek.com, 10/1/08). Some dropped 30%. With revenue depressing thriftless, Detroit’s carmakers are trying to save every penny.

GM executives and product planners tell nothing is final and that they could place in a former state some plans if the market turns around. But the company is still infectious a hard examine at what have power to be delayed as the assemblage’session shortfall in sales and revenue burns cash.

Sources inside the company say that all just discovered products planned for 2009 and 2010 (BusinessWeek.com, 6/3/08) are intact, because most of the unfolding money has been spent. But there could be a lull in new-vehicle launches in 2011 and 2012 granting that GM has to delay more plans.

That means GM would have some stale products just as the market is expected to turn around. But as a survival figure, it could work. GM would conserve cash at that time to make it through the recession and belief crunch. Around 2011 and 2012, when carry on cuts and a big health-care deal with the auto workers union are expected to excepting GM several billion dollars a year, the company would have more money to market its cars while getting the product plan back in succession track, says James Hall, principal of 2953 Analytics, a Detroit consulting firm.

"By 2011, the union deal starts to pay off and hopefully, the market gets better," Hall says. "GM has cars people want to bribe."