MercoPress. South Atlantic News Agency

Car industry downturn: GM reports losses of 15.5 b USD

General Motors reported on Friday a net three-month loss of 15.5 billion US dollars as North American sales fell by 20%. GM took a 3.3 billion charge for buying out the contracts of 19,000 hourly workers who left at the end of June.

It also wrote off 1.3 billion because of reduced values of big, used cars, which cut the value of formerly leased cars owned by its financing unit, GMAC. Without one-off charges, GM lost 6.3 billion compared with a net profit of 891 million in the same period of 2007. It is the third biggest quarterly loss in the carmaker's history. GM shares fell 4.7% in early trading. On 15 July, GM announced the latest stage of its restructuring plans, which include leaving redundant thousands of workers, speeding up the closure of truck and sports utility vehicle (SUV) plants, selling assets and suspending its dividend. On Friday, the carmaker said it might offer another round of buyout and early retirement offers to its 74,000 workers in the US. About a quarter of its US hourly workforce took the offers in the last round, which ended on 1 July. The staff cuts are needed because GM is cutting production as a result of falling sales of vehicles, especially SUVs and trucks. GM is not the only company suffering from the state of the car market. Earlier in the day, BMW warned that its profits for 2008 would be below forecasts and predicted a "difficult" 2009. Also on Friday, Nissan reported a 42.8% fall in its three month profits. Net profit fell to 491 million US dollars between April and June, compared to double the figure in the same period of 2007. "In the face of the severe operating environment, Nissan remains resilient but cautious on the outlook for our industry," said chief executive Carlos Ghosn, who also runs Nissan's French partner Renault. Nissan said it was trying to limit the effects of the slowing US car market by raising prices, cutting jobs and reducing truck production. Toyota and Ford also unveiled their July US sales figures. Ford said its car sales under the Ford, Lincoln and Mercury Marques were 8% higher than July 2007. Its Focus car was the star performer, with sales up 16% in July compared to a year earlier. However, sales of SUVs were 54% lower and trucks and vans were down 18%. Toyota also saw a large fall in sales of its larger vehicles in the US. It sold 32% fewer SUVs than in July 2007 and 33% fewer light trucks. Passenger car sales were also 8% down.