GM Reports $4.2 Billion Third-Quarter Loss

Auto Sales Down 11% From the Year-Ago Period

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DETROIT ( -- General Motors Corp. today reported dismal third-quarter results, posting a net loss of $4.2 billion on an adjusted basis for the period compared to a net loss from continuing operations of $1.6 billion in the same period last year.
Rick Wagoner
Rick Wagoner

Excluding one-time charges, gains and special items, GM's reported net loss was $2.5 billion in this year's third quarter and $42.5 billion in the same quarter a year ago, when GM recorded a massive one-time charge relating to assets.

Revenue for the quarter was $37.9 billion, down from $43.7 billion in the year-ago quarter, which the carmaker in a statement said reflected "dramatic sales declines across the industry driven by unstable market conditions, instability in the credit markets and dramatic retraction in consumer demand, especially in North America and Europe."

In its statement, the auto giant cited "turmoil in the global credit markets that resulted in the worst financial crisis in more than 70 years" and said many Americans who intended to purchase new vehicles were denied financing or found financing costs prohibitive.

GM is burning through cash: The automaker said the industry-wide slowdown in demand and the credit crisis resulted in negative adjusted operating cash flow of $6.9 billion in the third quarter, meaning far more money is going out than coming in.

"The third quarter was especially challenging for the auto industry," GM Chairman-CEO Rick Wagoner said in a prepared statement. "Consumer spending, which represents close to 70% of the U.S. economy, fell dramatically, and the abrupt closure of credit markets created a downward spiral in vehicle sales," he said. "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."

GM said it sold 2.1 million vehicles worldwide in the third quarter, down 11% from the same 2007 period. Its new-vehicle sales in North America slid 19% compared with the year-ago period. GM's global market share was 13%, off 0.7%, due largely to weakness in North America and Western Europe.

During the period, GM drew the remaining $3.5 billion of its secured revolving credit facility and made $1.2 billion in payments to auto supplier Delphi as required by bankruptcy-court agreements between the two companies.

GM said it expects its adjusted operating cash flow in the fourth quarter to be much improved over the last period, largely driven by expected improvements in working capital in North America and lower fourth quarter finished vehicle inventory in Europe.
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