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GM and Ford losses, cash burn dire

DETROIT - General Motors Corp and Ford Motor Co reported far deeper-than-expected quarterly losses on Friday and said their rate of cash burn had accelerated, as an extended slump in car sales raised questions about the future of the U.S. auto industry.

Both companies said they would take aggressive steps to cut costs further. The two largest U.S. automakers reported third-quarter results after the world's No. 1 automaker, Toyota Motor Corp, slashed its profit forecast for the year.

President-elect Barack Obama said on Friday that help for the U.S. auto industry was a high priority and urged the Bush administration to do "everything it can" to accelerate disbursement of USD 25 billion of loans to the industry previously approved to make fuel economy improvements.

GM shares fell more than 9 percent while Ford rose 2 percent. The two burned through a combined USD14.6 billion in cash in the face of deepening global downturn. Chrysler LLC is also burning through cash quickly, sources said. Ford and GM both expect their rate of cash use to decline in the fourth quarter.

The shelving of talks between GM and Chrysler parent Cerberus Capital Management raised more questions about the future of Chrysler, widely seen as the weakest of the Detroit-based automakers.

People with knowledge of the talks said Cerberus has had talks with Hyundai Motor Co about a potential acquisition of Chrysler's Jeep brand and other assets. Cerberus also plans to restart talks with other potential partners, including Renault-Nissan, the sources added.

In Germany both Bayerische Motoren Werke AG - BMW, the world's largest premium carmaker - and its rival Daimler AG, maker of Mercedes, posted sharp sales declines in October, citing weakness in the United States and western Europe. (Reuters)

 

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