Struggling General Motors announces $30bn loss

Detroit-based carmaker General Motors (GM), which is struggling to survive amid the economic downturn, has reported a fourth quarter loss of $9.6 billion (£6.7 billion), pushing its net losses for the 2008 year to $30.9 billion.

Last week, GM, which is America’s largest carmaker, said it needed to borrow up to $16.6 billion from the US Government in order to survive - this is in addition to the $13.4 billion it received late last year when it was on the verge of bankruptcy.

The car industry worldwide has suffered as consumers cut back on big ticket items and many other carmakers worldwide have been making major cut backs.

Century-old GM also recently announced plans to shed a massive 47,000 jobs worldwide (with about half taking place outside the US) and plans to shut five more factories.

Rick Wagoner, GM chairman and CEO, gave a grim outlook and said 2009 remains “challenging”.

Not only is the company suffering due to a slump in demand but it has warned that pension plans for hourly and salaried workers were under-funded by approximately $12.4 billion at the end of December 2008.

Meanwhile, Swedish carmaker, Saab, which is owned by GM, is discussing a reorganisation filing, which is an alternative to an outright bankruptcy filing and is the Swedish equivalent of filing for Chapter 11 bankruptcy in the US.

Saab‘s future has been in doubt since the Swedish Government rejected GM’s call for financial aid for the carmaker.

GM has confirmed it said that it wanted to sell its Swedish subsidiary, but it is unclear what the carmaker plans to do about its other European division, Opel.

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