Tim O'Brien | May 8, 2009

General Motors must be wondering whose headstone it has kicked over. Just when it seemed news could get no worse for the giant automaker, it gets worse.

GM is now reporting that it chewed through US$10.2 billion in the first quarter of 2009 as sales plunged, posting a US$5.98 billion loss – a net loss of $9.78 a share and nearly double its losses of a year earlier.

Even by its own standards, these new numbers, all penned in red and with zeros running across the page, show that the slide downward is accelerating.

And, if any more evidence was needed that Chapter 11 was looking as certain as sunrise for GM before the US Administration’s imposed June 1 deadline for an acceptable turn-around plan, these numbers all-but confirm it.

General Motors CEO Fritz HendersonOnly tax-payer funded bail-out loans, and the patience of the Obama Administration in keeping a lifeline going to GM, stand between it, its pension fund obligations, its bond holders and bankruptcy.

The problem for GM is that sales have fallen so dramatically, its declining revenues are simply killing (and overtaking) its cost-cutting measures.

It cut 3.1 billion in operating costs in the first quarter but it simply cannot keep up with the scale of the loss of sales, which GM itself has described as a “revenue implosion”.

Despite desperately trying to run down inventories in the Europe and the US, and having cut production to 900,000 vehicles for the quarter, GM revenues fell by almost half from US$42.4 billion to US$22.4 billion.

GM was extended a further lifeline last month of US$5 billion to assist it to keep operating through May. This was on top of the US$15.4 billion in short-term bail-out loans GM received in December from the Federal Treasury.

That June 1 deadline for a new plan - now less than four weeks away - to overhaul its debt and operating costs, and for winning over the United Auto Workers Union and bond holders to a new austerity and rebuilding package, is now coming at GM like a charging bull.

The prospect of it succeeding in completing a debt restructuring out of court grows daily more remote. It needs to gather enough support from its bond holders to extinguish US$24 billion in debt in exchange for new shares. (Its share value though won’t have bond holders rushing to the table on that one.)

It will have to pull an almighty rabbit out of the hat if it is to survive.

General Motors factory worker

Unfortunately, it is not finding any rabbits in any hats in GM showrooms. Buyers are simply deserting it there and in Europe (where it lost US$1.2 billion in the quarter just gone); the spectre of bankruptcy is no help in selling anything – let alone cars and trucks.

How much is it hurting? GM sales fell 47 percent in North America in the first quarter, and fell by 28 percent globally.

Holden, and the strength of the Commodore here, while feeling the effects of the general slowdown in sales, stands as a beacon in what is mostly a deplorable sales ledger for any nameplate prefixed by the letters ‘GM’.

But GM, having hatcheted Pontiac and trying to divest itself of Hummer, Saturn and Saab – and possibly Opel and Vauxhall to boot – would like a smaller family of just four brands: Cadillac, Chevrolet, GMC and Buick.

Where Holden fits into that world view of course, is moot.

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