As it bids to break even at a US total industry sales volume of approximately 10 million vehicles, General Motors has updated its Viability Plan which will deepen the cuts in its operations.
The new plan has been included within General Motors’ (GM) prospectus for bond exchange offer in which it is offering certain bondholders 225 shares of stock for each $1,000 principal amount of GM notes and a cash payment for all accrued but unpaid interest to the settlement date. If the bond exchange fails, it will result in GM entering bankruptcy.
The significant changes outlined in the plan include:
- - A focus on four core brands in the US – Chevrolet, Cadillac, Buick and GMC. The Pontiac brand will be phased out by the end of 2010 and GM will offer a total of 34 nameplates in 2010, down 29 per cent from the 48 available in 2008. This revised plan also moves up the resolution of Saab, Saturn and Hummer to the end of 2009 at the latest.
- - A restructure of GM’s dealer organisation with the number of dealers to drop to 3,605 by the end of 2010 – that’s down from 6,246 in 2008.
- - The idling and closures of powertrain, stamping and assembly plants will be accelerated in a bid to improve US capacity utilisation. The total number of plants in the US will be cut from 47 in 2008 to 34 by the end of 2010 and to 31 by 2012.
- - Hourly employment levels are to be reduced from around 61,000 in 2008 to 40,000 in 2010. This also assumes a reduction in hourly labour costs from $7.6billion in 2008 to $5billion in 2010.
- - General Motors North America structural costs are to decline by 25 per cent from $30.8billion in 2008 to $23.2billion in 2010.
During the course of the plan, GM will look to make significant investments in future products and new technologies with development and testing of the Chevy Volt to remain on track with production to start by the end of 2010.
