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In preliminary 2005 results released today, GM said it will post a loss of $3.4 billion, excluding special items, compared with net income of $3.6 billion in calendar 2004. Including the special items, the auto giant’s loss climbs to $8.6 billion vs. net income of $2.8 billion the prior year. Revenue dipped to $192.6 billion last year in from $193.5 billion in 2004.
9.2 million vehicles sold
Despite selling 9.2 million vehicles worldwide -- the second-biggest annual volume in GM history -- the company’s global auto operations reported an adjusted loss of $5.3 billion last year vs. adjusted 2004 earnings of $1.2 billion. GM reported its worldwide market share slipped to 14.2% in 2005 from 14.4% in 2004.
In North America -- the world’s largest auto market -- GM registered an adjusted loss of $5.6 billion last year, which it attributed in part to higher marketing and advertising costs, lower production volumes and a weaker sales mix.
“GM’s top priority is to restore our North American operations to profitability and positive cash flow as quickly as possible,” GM Chairman-CEO Rick Wagoner said.
In a statement, Mr. Wagoner called 2005 “one of the most difficult years in GM’s history, driven by poor performance in North America.” He added that “it was a year in which two significant fundamental weaknesses in our North American operations were fully exposed -- our huge legacy cost burden and our inability to adjust structural costs in line with falling revenue.”
He also cited restructuring charges and issues tied to the Chapter 11 bankruptcy filing of Delphi Corp., its spun-off parts supplier.
Strong results abroad
The company said its drop in worldwide market share was mainly driven by its sagging North American auto business, offset a bit by improved results in Europe, Latin America, Africa and the Middle East. GM said it set record vehicle sales in two regions: Asia-Pacific, up 20% vs. 2004 and sales of more than 1 million units; and the combined region of Latin America, Africa and Middle East, up 19%. Mr. Wagoner said GM is the top foreign brand in China, now the second-largest auto market behind the U.S.
Mr. Wagoner’s revitalization plan for GM, unveiled several months ago, includes halting production at nine North American facilitates and cutting 30,000 blue-collar jobs by the end of 2008. The automaker has recently announced a “permanent repricing” strategy.