GM falls behind Toyota in annual global sales

General Motors' annual global sales drop 11 pct.; Toyota becomes No. 1 after 77 years for GM

NEW YORK (AP) -- Toyota Motor Corp. sold more cars and trucks worldwide than any other automaker last year, seizing the crown General Motors Corp. held for 77 years. But with its overall sales having fallen for the first time in 10 years and the entire industry mired in a slump, there's little for the Japanese company to celebrate.

GM said Wednesday it sold 8,355,947 cars and trucks around the world in 2008, falling about 616,000 vehicles short of the 8.972 million Toyota announced Tuesday. GM said the shortfall was mainly caused by the economic downturns in the U.S. and Europe that slashed vehicle demand in those major markets, where Toyota doesn't have as large of a presence.

Mike DiGiovanni, GM's executive director of global market and industry analysis, downplayed the significance of the drop to No. 2, saying that the automaker is focused on profitability rather than sales volume.

"I don't think being No. 1 in vehicle sales means much at all to the American consumer," DiGiovanni said in a conference call with reporters and analysts. "I think what matters most to the consumer is strong brands and strong products. And the key thing right now with what the industry is going through now is viability and profitability."

Detroit-based GM, which has closed plants and laid off workers to cut production as it faces the worst U.S. auto market in more than 25 years, received a $13.4 billion lifeline from the federal government last month. But the bailout requires GM to submit a plan for long-term viability, and the loan may be called back if the government hasn't determined by March 31 that the plan can succeed.

DiGiovanni said all automakers are currently facing risks and challenges not seen since the Great Depression, and he pointed out that even Toyota expects to post an operating loss for the current fiscal year -- its first in 70 years.

Toyota's overall global sales fell 4 percent for 2008, marking that automaker's first decline in a decade. The Japanese automaker has cut production in both North America and Japan to align its product offerings with slowing consumer demand.

GM posted an 11 percent drop in global sales, including a 21 percent drop in North America. GM Europe sales fell 6.5 percent, including a 21 percent plunge in the fourth quarter as the global economy melted down.

Those declines were partially offset by a 3.2 percent increase in sales at GM's Latin America, Africa and Middle East region, and 2.7 percent growth in Asia-Pacific sales. Sales outside of the U.S. accounted for 64 percent of GM's global sales in 2008, up from 59 percent the year before.

Toyota's move into the top sales spot wasn't unexpected. The automaker nearly leapfrogged GM in 2007, selling only about 3,000 fewer vehicles than the U.S. company did that year.

DiGiovanni said Toyota's move to the top of the sales rankings doesn't necessarily signal a turning point in the industry. He said it's entirely possible that GM could regain the No. 1 spot once U.S. and European markets recover and sales in key emerging markets pick up.

"That story has yet to be written," DiGiovanni said. "Nobody knows what's going to happen."

GM shares rose 3 cents to end at $3.53, while Toyota's U.S. shares rose $1.64, or 2.5 percent, to $67.52.

CHICAGO (Reuters) – General Motors Corp, nearing a Tuesday deadline to present a viability plan to the U.S. government, is considering as one option a Chapter 11 bankruptcy filing that would create a new company, the Wall Street Journal said in its Saturday edition.

"One plan includes a Chapter 11 filing that would assemble all of GM's viable assets, including some U.S. brands and international operations, into a new company," the newspaper said. "The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked."

Citing "people familiar with the matter," the story said that GM could also ask for additional government funds to stave off a bankruptcy filing.

GM declined to comment, the story said.

General Motors and Chrysler LLC face a Tuesday deadline to file restructuring plans to the government in exchange for receiving $17.4 billion in federal loans.

Automakers have struggled as U.S. auto sales have tumbled amid a recessionary economy. U.S. auto sales in January tumbled to a 27-year low.

GM has been in talks with bondholders and the United Auto Workers union to get an agreement on a restructuring that would wipe out about $28 billion in debt for the auto maker, sources have told Reuters. However, it appears unlikely a deal could be reached by the Tuesday deadline, they said.

GM has already announced plans to cut 10,000 salaried workers worldwide, or 14 percent of its staff, impose pay cuts for most remaining white-collar U.S. workers and has offered buyouts to its 62,000 U.S. workers represented by the UAW.

In addition, it is trying to sell its Hummer SUV and Swedish Saab brands and is reviewing the status of its Saturn brand.

DETROIT – Dreaded white-collar job cuts at General Motors Corp. started Tuesday as the wounded automaker began to deliver on promises to the government to shrink its work force so it can be profitable at lower sales levels.

On Tuesday morning, GM told 160 people at its manufacturing engineering operations in Warren, Mich., that they would be laid off as of April 1, spokesman Tom Wilkinson said.

It's the beginning of 3,400 salaried layoffs in the U.S. and part of the 47,000 job cuts that GM wants to accomplish worldwide by the end of the year, Wilkinson said.

"It will impact every area of the business. Some of those will be through normal attrition, but there will be a significant number of involuntary separations coming from now through the early part of May," Wilkinson said.

Tuesday's cuts were mainly engineers, coming as GM's North American manufacturing footprint shrinks to match reduced sales and market share.

The company has announced the closure of nine assembly, parts stamping and power train factories since the end of 2005, and it plans to close five more factories.

"These are good capable people," Wilkinson said of those being laid off. "The reductions are just necessary to implement the viability plan and restructure the business to make it self-sustaining."

GM is living on $13.4 billion in government loans and has requested another $16.6 billion to weather the worst auto sales downturn in 27 years.

Chrysler LLC also is taking government loans. The company has received $4 billion so far and wants another $5 billion.

Both companies were required to submit restructuring plans to the Treasury Department on Feb. 17 showing how they can become viable and repay the loans. The deadline for finalizing the plan is a week away, on March 31.

Besides the salaried job cuts, GM plans to cut 18,000 more U.S. blue-collar workers by the end of the year. Tuesday is the deadline for hourly workers to accept buyout and early retirement offers.

GM, which now employs 243,000 people across the globe, will give roughly two weeks of severance pay to employees for each year they have worked. That includes base salary plus the company's share of most benefits.

The automaker has 29,650 salaried employees 62,400 blue-collar workers in the U.S.

GM, Chrysler race deadlines to hold off bankruptcy



DETROIT (AP) — He doesn't know exactly what the Obama administration wants him to cut, but Fritz Henderson, the new CEO of General Motors Corp., isn't waiting around to find out. Cut deeper. Work harder. Move faster. That's how he described the ailing automaker's urgent effort to meet a June 1 deadline to fix its debt-ridden balance sheet, cut billions in costs and take other steps to transform itself into a profitable entity.

It's the same government-imposed race that Chrysler LLC is running, only GM's smaller neighbor has to cover more distance in half the time.

The Auburn Hills, Mich., automaker must make the same cuts as GM, and sign up Fiat Group SpA as a partner, all in 30 days. Fiat's CEO jetted to Detroit for intense negotiations, but if Chrysler doesn't meet the deadline, it's almost certainly destined for the auction house.

For GM, failing to take quick action means surrendering to court supervision in bankruptcy. The company has resisted bankruptcy talk in the past, but Henderson said Tuesday it is now "certainly more probable."

The companies have yet to receive specifics from the task force on how much more they must cut and where, but Henderson is proceeding with deeper cuts and pulling previously announced measures forward.

"We need to reinvent General Motors, and we need to do it in a very, very abbreviated time frame here in 2009 so that we're not spending our time careening from crisis to crisis in the future," he told reporters at GM's headquarters complex in downtown Detroit.

There are formidable obstacles, though. Even with less demanding hurdles in the government's original loan terms, GM's bondholders have been reluctant to settle their $28 billion for what may be pennies on the dollar. The company still hasn't reached a deal with the United Auto Workers on funding a union-run trust that will take over retiree health care costs.

It's uncertain whether they can work together to compromise on their competing interests, even though failure means they stand to lose a lot more.

It was clear, though, that every scenario will include more pain for just about anyone connected with the companies.

GM said in its February plan it would cut 47,000 jobs worldwide by the end of the year. Presumably those cuts will come sooner.

Henderson said GM also must slash its staggering liabilities — not just the $49 billion in bond debt and secured loans, but also pension obligations and retiree health care costs.

"We need to basically address all of our level of indebtedness, because in fact, what they want is a healthy balance sheet, and that healthy balance sheet needs to address each of these constituencies," he said.

Henderson wouldn't say specifically if pensions or health care would change, but it's likely that GM's 400,000 U.S. retirees and spouses will see benefit cuts, along with its 244,000 active workers.

He said the company probably will close more than the five factories it promised to shutter in its February restructuring plan filed with the government. More buyout and early retirement offers are likely.

If GM doesn't satisfy the government in time, a short bankruptcy would allow the company to wipe out its debt, change contracts and emerge as a healthy business. The government is backing automakers' warranties and has pledged financing for GM.

For Chrysler, however, Obama's auto task force has decided it has no chance to survive alone, and it would be left to get sold off in pieces. There were signs of progress, however, that a partnership could be arranged.

Fiat CEO Sergio Marchionne flew to Detroit late Monday for talks, and the Italian automaker agreed to reduce its stake in Chrysler from 35 percent to 20 percent in exchange for providing small-car technology, according to a person briefed on the negotiations who was not authorized to speak publicly. Under the new terms, Fiat's share would increase in 5 percent increments every time certain milestones are met, the person said.

At GM, Henderson said the 60 days should be enough time to accomplish its work, but bankruptcy could come before then if GM management and the government determine it won't be able to meet the deadline.

"If it's quite clear that we're not able to accomplish what we need to do in terms of operational restructuring, reduction of debt on the balance sheet and what we need to do to accomplish these broad parameters of having a viable business, this will be a management judgment," Henderson said.

Besides slashing costs, GM must start selling more cars, and the company announced Tuesday its own version of a plan that will make car payments for customers who lose their jobs through no fault of their own. It's called "Total Confidence," and its designed to pull in timid buyers who fear the economy will claim their employment.

The company, Henderson said, counted on revenue for too long from trucks and sport utility vehicles. Now, every vehicle has to turn a profit. That means unprofitable cars and trucks could get the ax, and soon.

"The view is everything's got to pay rent in our product portfolio," he said.

GM also has to jettison unprofitable brands, including iconic Hummer. A decision on closing or selling was supposed to be revealed Tuesday, but GM is still talking with potential buyers. Henderson said an announcement will come within weeks.

GM is alive today only because of $13.4 billion in government loans, and Henderson wouldn't reveal how much more money the century-old company will need to get through the 60 days. The Treasury Department has not told the company how much money it will get to sustain itself, but Henderson said he doesn't expect a dollar more than necessary.

"We submit reports to them weekly in terms of our cash, both in the U.S. and on a global basis," he said. "They know exactly where we are and exactly what we are doing."

Henderson, officially named CEO by the GM board on Sunday, said he isn't worried that the government will fire him like it did his predecessor, longtime CEO Rick Wagoner.

"They've asked me to do the job. I'm not going to really worry about how long that's going to be," he said. "I figure if we get our job done, which is where I'm going to focus my attention, it's going to be OK. And if they want to replace me they can do it."

DETROIT – About 1,600 workers at General Motors Corp. will lose their jobs in the next few days as the troubled automaker accelerates cost cuts in order to qualify for more government aid.

GM North America President Troy Clarke said in an e-mail to employees sent Monday that the layoffs are needed to ensure the company's long-term viability.

"In these unprecedented times, GM is reinventing every aspect of our business, including our organizational size and structure, to create a lean and agile company," Clarke wrote in the e-mail obtained by The Associated Press.

Clarke said the next week will be "a very trying time for the entire GM team, but especially for those employees directly impacted by these actions."

GM is living on $13.4 billion in government loans. The automaker faces a June 1 deadline to cut costs and gain concessions from stakeholders in order to get more government help.

Last month GM began cutting 3,400 U.S. salaried jobs as part of the 47,000 job cuts that it will make worldwide by year's end.

The e-mail says GM's leadership team has received training on how to handle the layoff notification process with respect and dignity. The company, he said, will provide laid-off workers with resources and support through the process.

GM must cut costs and win concessions from bondholders and its unions in order to get more government aid. The government's auto task force has said the company must persuade the holders of $28 billion in GM bonds to take stock in exchange for part of the debt.

Unions in the U.S. and Canada must agree to concessions, too. For GM to qualify for more help, the United Auto Workers must agree to take stock for part of the roughly $20 billion that GM must pay into a union-run trust that will take over retiree health care costs starting next year.

If it doesn't restructure enough by the deadline, Detroit-based GM could be forced into Chapter 11 bankruptcy protection with the government providing financing. The government advocates a short "surgical" bankruptcy to cancel debt, change union contracts and separate underperforming units from the company.

GM CEO Fritz Henderson said Friday that the company still would prefer to restructure out of court as it tries to prove it can survive to repay the government, but he conceded that bankruptcy protection is more likely than it was in the past.

Chrysler LLC faces an earlier deadline of April 30 to gain similar concessions and finalize an alliance with Italy's Fiat Group SpA. Fiat and Chrysler are discussing a deal that would give Fiat a 20 percent stake in the Auburn Hills, Mich.-based automaker in exchange for Fiat's small-car technology.