Thursday, May 24, 2018
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GM bankruptcy called possible if sales continue to deteriorate

NEW YORK - General Motors Corp., battered by the slowest U.S. sales in 15 years, faces the possibility of bankruptcy and may need to raise as much as $15 billion, a Merrill Lynch & Co. analyst said yesterday.

The "dramatic drop-off" in sales probably will continue through 2009, analyst John Murphy said in a report. "Bankruptcy is not impossible if the market continues to deteriorate."

Mr. Murphy's assessment follows GM's report Tuesday that its June U.S. auto sales fell 18 percent as rising gasoline prices damped demand for pickup trucks and sport utility vehicles.

Renee Rashid-Merem, a GM spokesman, said in an e-mail yesterday that the automaker has "sufficient liquidity and financial flexibility to meet its 2008 funding requirements." The company may consider "reducing structural costs, selling non-core assets, and retiming or eliminating other capital spending," she said.

GM had $24 billion in cash and marketable securities and access to about $7 billion in U.S. loans on March 31, at least $6 billion more than it initially figured it would need for a U.S. decline, Chief Financial Officer Ray Young said in May.

The automaker said Tuesday that it plans to cut North American production this quarter 12 percent to about 900,000 vehicles.

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