GM sees Hummer sale by early '09, tough times ahead
General Motors expects to sell its Hummer brand by the end of this year or early in 2009, as it shores up capital to survive a deep industry slump amid record losses.
GM, which has lost $51 billion over the past three years, plans to free up $15 billion in liquidity with cost-cutting, asset sales and new borrowing under a July plan intended to reassure investors that it can ride out of the down turn.
“We are trying to approach this (Hummer sale) on an urgent basis,” its chief operating officer said. “End of this year is a fair amount of time. It can conceivably happen ... but if it takes us to early next year, that is okay, too,” Fritz Henderson told reporters.
“We are working quickly. It will be premature to mention something,” Henderson said on Wednesday, adding that “several” suitors had approached GM. But he declined to name any.
At the launch of a new model in the Indian capital he added he expected the US auto industry to face challenges for some time and sees vehicle sales there falling to 14 million vehicles in 2008 from 16 million last year.
GM was not just looking at selling brands but also other businesses, but Hummer would be among the first, he said.
The gas-guzzling Hummer has hurt GM's image at a time when consumers demand more fuel efficiency as high oil prices hurt. Hummer's US sales fell 40% in the first half of the year.
GM is realigning its North American production to reflect a US auto market reeling from an oil shock being compared to those of the 1970s. It plans to close four truck plants but add shifts at two others that build popular higher mileage cars.
Henderson expects softer sales in the United States in 2008 as oil prices and the credit crisis deter customers.
“It is going to stay challenging for some time,” he said. “Have we found the bottom? I don't know.”
On Tuesday he said the top priority was to turn round the North American business and continue investments in emerging markets such as India and China.
He inaugurated the car maker's second plant in India on Tuesday and GM hopes to control a 10th of the Indian market by 2010, when passenger vehicle sales are expected to hit more than 2 million vehicles.
When asked how soon he expected emerging markets to offset the slump in US, he said: “It is not about either/or, it is about both.” (Reuters)
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