General Motors Chairman and CEO Rick Wagoner announced a series of steps this morning that will attempt to get the world’s largest auto manufacturer back to its old self again. Chief among the moves is the suspension of GM’s dividend payouts to stockholders, salaried worker cuts of 20%, and the plan to sell assets—with a reminder that Hummer is officially, officially, officially under review for a sale. All in, GM hopes to create up to $15,000,000,000 in liquidity to weather the storm ahead.
Listeners to the press conference likely noticed a marked change in GM’s tone: this isn’t a temporary dip in the market—it’s a permanent change. Specifically, GM’s ability to generate profits from trucks and utility vehicles isn’t playing in today’s market (and hasn’t for a period of time). The straight talk came with a set of assumptions that GM will use for planning purposes, although Chairman Wagoner voiced that the following isn’t their projection for the industry, just a set of numbers it feels it can be confident in as it goes about its business: U.S. total vehicle sales for 2008 and 2009 will be only 14 million units (GM capturing 21% of that number) and oil will remain between $130 and $150 per barrel.
"We are responding aggressively to the challenges of today's U.S. auto market," said GM Chairman and CEO, Rick Wagoner. "We will continue to take the steps necessary to align our business structure with the lower vehicle sales volumes and shifts in sales mix. We remain committed to bringing to market great products that target changing consumer preferences for more fuel-efficient vehicles."
Although specific talk of selling brands was limited to the notion that “a strategic analysis of Hummer is underway,” the company did say it is undertaking a “broad, global assessment” of all of its assets.
Today’s announcement will allow GM to have enough cash on hand for operations through the end of next year and, for Wall Street’s sake, likely show that the company is getting serious (more serious, perhaps, than other manufacturers who are in similar situations) about the changing marketplace. It might also cast aside any bankruptcy talk—a thread that’s been swirling around Wagoner’s team for a number of weeks with increasing voracity.