General Motors, America's biggest car maker, yesterday reported a $31bn (£21.7bn) full-year net loss and warned that without a further $30bn cash injection from the Obama administration it would soon no longer be a "going concern". The grim losses prompted German ministers to call on four other EU governments, including Britain, to draw up a joint rescue scheme for GM's loss-making European operations, including Opel and Vauxhall. They want them divested from GM. Tens of thousands of GM workers staged demonstrations at plants across Europe, including Ellesmere Port on the Wirral, in support of a government-funded spin-off from Detroit. The growing clamour for state aid threatened to blow up into a full-scale transatlantic trade war, with French president Nicolas Sarkozy arguing that US support for GM and Chrysler could breach World Trade Organisation rules. His own €7.5bn national scheme is under fire in the EU for being protectionist. GM, which has already received $13.4bn in federal aid, said it lost $9.6bn in the final three months of 2008 when it burned through a further $5.2bn in cash as US car sales plunged to a 50-year low. The results, including $3.7bn of writedowns, were even worse than expected and were exceeded only by the $43.3bn losses, including exceptional items, in 2007. Group debt rose to $45.3bn, the underfunding of its pension scheme to $12.4bn and cash reserves to a bare minimum of $14bn. Its European business, in Germany, Britain, Spain, Belgium and Poland, lost $1.9bn as sales drooped and earnings were hit by the strong euro. Full-year losses in Europe were $2.8bn or five times higher than the $524m of 2007. Ray Young, chief financial officer, said GM and its auditors would determine in its delayed annual report whether it could continue operations. This depends on whether it gets the extra $30bn in federal loans and whether its restructuring plan, submitted to Washington last week, works. It envisages a further 47,000 job losses, including thousands in Europe. Auditors are studying the company, Young told analysts, because "there's uncertainty about how the treasury will view our viability plan" and "uncertainty on whether we're going to be able to execute the terms of our loan agreement". Frank-Walter Steinmeier, German foreign minister and deputy chancellor, told demonstrators at Opel's main German plant in Rüsselsheim that at least five EU governments should "sit at the table" and agree a plan to rescue GM Europe. He said European plants could not be "thrown away like a squeezed lemon" but Berlin ruled out immediate state equity. Meanwhile, Opel and other German car makers, including Volkswagen, celebrated a huge boost to sales through the government's "scrappage" scheme, giving €2,500 (£2,237) to trade in 10-year-old bangers for new, fuel-efficient models. VW said its German sales this month already stood at a record 120,000 while Opel said its small Corsa had seen sales leap to 40,000 - its best month for five years. The European Commission has given its blessing to several similar schemes but voiced serious competition concerns about six general rescue schemes, including Britain's £2.3bn plan.Call to hive off General Motors Europe as US parent sends out $31bn distress signal
Friday, 27 February 2009
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