Bankruptcy not an option: General Motors

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A top official of General MotorsGeneral Motors told Emirates Business that "bankruptcy was not an option" and that GMGM was not considering "doing a Lehman" or "filing for Chapter 11".

There have been persistent reports in the media that the world's biggest automaker is facing a tight liquidity situation.

Maureen Kempston Darkes, GM Group Vice-President and President of GMGM Latin America, Africa and Middle East, also refused to comment on whether the automaker was in negotiations with a white knight investor or institution to inject much-needed funds in exchange for part equity in the company.

"We are all the time looking worldwide for a long-term strategic partner," was all Darkes would say adding that the company has not asked for a loan from the Federal Reserve.

The auto industry in the US has received a government promise for a $25 billion package to help it through the current credit crunch.

GMGM has its own $15bn liquidity enhancement plan that it announced in July. According to the plan, two-thirds of the amount is to be generated internally and another $5bn from outside.

"We are working hard to execute the plan," Darkes said, adding that as the situation unfolds, the automaker will update its liquidity plan.

The GMGM official would not comment on the talks about a possible GM-Chrysler merger. "Automakers talk to each other all the time, beyond that I have nothing specific to say regarding talks with Chrysler," she said, adding that the company has sent "packages of information" to interested buyers of the for-sale Hummer.

GMGM, which is celebrating 100 years this month, said it will be around for another 100 years and is encouraged by the success of its recent cost-cutting measures.

"Between 2005 and 2007, we have brought our costs down by $9bn against the announced figure of$5bn. By 2011, we will have cut costs by another $6bn," said Darkes.

She said that in September the US auto giant executed an encouraging financial transaction of equity swaps and retiring debt of $490 million.

GMGM seems to be pinning its hopes for the near future on better sales showing in the emerging markets of Latin America, Africa and Middle East under Darkes; and on Volt, the new electric car that is to hit the market 2010.

"We are focused on strong growth in emerging markets. This year will be the fourth straight year we have sold more units outside the US. We had a record 2007 with 1.2 million sales and $19bn in revenue (against more than $4bn in 2006). We have had a revenue year-on-year growth of 20 per cent since 2003.

But Darkes seemed to hedge her job bets by not painting too much of a rosy short-term future for the markets under her.

"Because of the global turmoil, there will be a slowdown - but growth will be there," the General MotorsGeneral Motors official added.

Appointment
GMGM has appointed Michael (Mike) Devereux to the position of President, General MotorsGeneral Motors Middle East, effective from November 1, 2008. Mike replaces Terry Johnsson who takes up a senior GMGM position in China after four successful years heading GMGM operations in the region, during which company sales more than tripled.

The change was announced by Maureen Kempston Darkes, General Motors Group Vice-President and President of General MotorsGeneral Motors Latin America, Africa and Middle East (LAAM), as she visited the Middle East.

Mike will report to Maureen Kempston Darkes. He will also become a member of the LAAM Regional Strategy Board.

By Eudore R Chand

© Emirates Business 24/7 2008