Following in suite with Ford Motor Company that reported a $7,2 billion operating loss for the third quarter of the year, General Motors posted a $4.2 billion third- quarter operating loss and said its available cash fell to $16.2 billion on Sept. 30 from $21 billion at the end of June. GM said that while it will try to boost liquidity, it might fall below the minimum amount of cash (estimated to be around $11 billion to $14 billion) needed to keep the company operating by the end of the year and asked for federal aid.
“Even if GM implements the planned operating actions that are substantially within its control, GM’s estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business,” the company said in a statement.
GM, which saw its U.S. auto sales fall a staggering 45% in October, reported a net loss of $2.5 billion or $4.45 per share for the third quarter, including special items. That compares with a net loss from continuing operations of $42.5 billion or $75.12 per share in the third quarter of 2007, which included a non-cash charge of $38.3 billion to establish a valuation allowance against some of the company’s net deferred tax assets. The company’s revenue for months of July, August and September was $37.9 billion, down from $43.7 billion in the year-ago quarter.
“The third quarter was especially challenging for the auto industry. Consumer spending, which represents close to 70 percent of the U.S. economy, fell dramatically, and the abrupt closure of credit markets created a downward spiral in vehicle sales,” said Rick Wagoner, Chairman and CEO of GM.
“The U.S. government’s actions to help stabilize the credit markets and eventually ease the credit crunch are an essential first step to the economy’s and the auto industry’s recovery, but further strong action is required,” Wagoner added.