GM loses another 4.8 billion dollars.

[Dino Scuderia]

Worse than predicted.

General Motors Adjusted Loss Is $1.2 Billion

By TSC Staff
1/26/2006 8:38 AM EST

Updated from 8:34 a.m. EST

General Motors' (GM:NYSE - commentary - research - Cramer's Take) fourth-quarter results were far worse than analysts feared, with the struggling North American automotive division posting an adjusted loss of $1.5 billion.

The North American loss, which reversed a profit of $449 million a year ago, reflected GM's decision to shift production away from sports utility vehicles, plus the now-customary GM headwinds of higher health care, marketing and health care expenses.

Overall, GM lost $4.8 billion, or $8.45 a share, in the quarter, including charges of $3.6 billion, or $6.36 a share, for items including a benefit restructuring with its union and at Delphi. GM last year announced a program to drastically scale back its North American capacity, including up to 30,000 job cuts.

Excluding items, GM lost $1.2 billion, or $2.09 a share, in the fourth quarter of 2005, badly missing the Thomson First Call loss estimate of 16 cents a share. The company earned $726 million, or $1.28 a share, on an adjusted basis last year.

Revenue was $51.2 billion in the most recent quarter, down from $51.4 billion last year.

Worldwide total vehicle sales were 9.2 million in 2005, the second most of any year in the company's history, as overseas strength offset a 3.1% unit decline in North America.

"GM's top priority is to restore our North American operations to profitability and positive cash flow as quickly as possible," it said. "In 2005, we laid out a comprehensive and integrated strategy to address the structural issues that impede our competitiveness and profitability, and we are focused on rapidly executing all aspects of the turnaround plan."

The stock fell $1.05, or 4.4%, to $22.80.

Weakness in GM's automotive operations offset another strong quarter for General Motors Acceptance Corp., which earned $614 million, compared with $683 million year ago.

Outside of the U.S., GM Europe had an adjusted loss of $159 million in the fourth quarter, compared with a loss of $345 million a year ago, while GM Asia Pacific earned an adjusted $112 million, compared with $117 million a year ago.

"2005 was one of the most difficult years in GM's history, driven by poor performance in North America," the company said in a release. "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. Our results were also dramatically and adversely affected by charges for restructuring and matters associated with Delphi Corp.'s Chapter 11 filing.

"In order to improve financial results in 2006 and 2007, we are moving quickly to implement several important actions that will address these weaknesses in North America. And, we have a good line of sight on the steps we need to take to further reduce structural costs on a global basis that will position GM for long-term success."

http://www.thestreet.com/_googlen/st...FREE&cm_ite=NA

[henk4]

and again they blame US costs, and not changes in demand patterns

[spi-ti-tout]

I'll prepare a bye bye card on behalf of UCP.

[NSXType-R]

That sucks. However, GM should have fixed those problems a long time ago instead of allowing them to snowball out of control. This is what happens when you procrastinate on a corperate level.

[henk4]

at the same Hyundai announces a fourth quarter profit of 550 mln Euro, or almost 700 mln US$. Are they producing the right vehicles??? (Santa Fee, Tucson, Grandeur??) At least they have a included modern diesel technology in their range.

[Dino Scuderia]

Hyundai is finally 'getting it' in the design department....I'm seeing a lot of their newly redesigned Sonata's on the road which are in the Camry/Accord class. They are nice looking and very well priced..Korean cars are where Japanese cars were about 12-15 years ago but they are gaining market share faster it seems.

[Pando]

I think the structure problem is that GM has always focused on the North American market and what they assumed the people wanted. The globalization hit back and North American consumers "started" opening their eyes to foreign brands, mainly asian. Now the American brands stand with a finger in their mouth and try to export their cars that even the Americans have lost interest in and again assume what the european and asian market wants while saving money by cutting costs (and corners) which shows in the results. A tricky situation to get out of. The bigger they are the harder they fall.

[PerfAdv]

In Europe, are Japanese cars more or less expensive than comparable cars built within EU?

[SlickHolden]

Might be to late for GM to change it's ways now.

How dumb are they in NA, Cars that are around the world in the GM family that are not sold in NA are selling great and making some profits, Why wouldn't GM NA look more into that.
They do stupid things take RWD off there line-ups and now regret it.
Make cheap highpowerd cars in 2 doors only.
Make high powered 3000kg trucks, Why not a 1900kg high powered truck like Holden crewman, Tows over 2500kg 260kw 5 seats and isn't drinking petrol like a wale drinks water.
Guys in the U.S always comment on how we in OZ have great high powered 4 door sports cars, (Most say we are lucky) $10,000 cheaper then a Monaro(GTO)
Based on the monaro (GTO) price a VZ SS would be $23,000-$25,000 USD
And then there is the SV8 Which looks like the VZ SS but is $6,000 cheaper, So who wouldn't buy one. Then theres the Utes which are so cheap also RWD or AWD who wouldn't buy them?. There are so many great cars around the world in GM subsidiary and they think they know what NA wants cause they want it.

[ruim20]

In Europe, are Japanese cars more or less expensive than comparable cars built within EU?

Less expensive and better build quality. The word is starting to be japonese, also because of the service quality.

[Matra et Alpine]

In Europe, are Japanese cars more or less expensive than comparable cars built within EU?

The best selling Japanese cars are built IN the EU now.
( and most designed there too )
There's no clear winner/loser on prices. Goes by model.
eg Skoda are fantastic pricing at the mo for the Fabia for what you get

[IBrake4Rainbows]

Despite the move away from SUV's by both Manufacturers and the Consumer, there still losing money. it appears to be coming out of every orifice.

Bet they wish they had a time machine; they'd be telling the Unions way back when to go jump!

A figure for you; GM spends $1500 per Vehicle supporting it's Healthcare beneficiaries, more than the Value of steel in any one vehicle. Food for thought; no wonder manufacturing is being shifted over to China and Eastern Europe, where they don't have to pay such niggling things.

[PerfAdv]

Less expensive and better build quality. The word is starting to be japonese, also because of the service quality.

The best selling Japanese cars are built IN the EU now.
( and most designed there too )
There's no clear winner/loser on prices. Goes by model.
eg Skoda are fantastic pricing at the mo for the Fabia for what you get

Matra, ruim,

What I'm thinking is it boils down to is making a better product. Better for intended use would be more accurate. Most people buy cars out of necessity and want the car to function more or less like an appliance. Japanese cars fit that description perfectly. Of course now that they are firmly established they've diversified into luxury and sports but the staple is still bread-n-butter transport.

What I was thinking is that EU still has tariffs on Japanese cars. The indegenous auto industry does need protection from the superior(see above ) products. Initially the Japanese dump their product until the population gets a taste of reliability, durability, resale, etc. Then as the people more readily buy Japanese the local auto industry slowly dies. Dumping tactic or not, in the final analysis whoever's got the better product wins.

Might seem unfair and I sense some crying foul but if you don't have a plan to provide the "right" product or service, how can you expect to stay in business.

[NuclearCrap]

Nice, I love to see GM go down. Take this literally.

[nota]

Oz financial news reported this morning that General Motors in financial year 2005 incurred a loss of $11.4 billion - IIRC a net figure and likely measured in AUD

To put that in perspective, $AU 11.4 billion is equal to the entire Gross Domestic Product of many smaller nations, like Iceland etc

That's a very tough position for GM, given the long structural lead-times in automotive business