We are just weeks away from the government-imposed deadline for GM and today that automaker reported a loss of $6 billion in the first quarter with its revenue cut nearly in half as new car shoppers fear purchasing from a automaker that may be headed toward bankruptcy.
GM said that it spent $10.2 billion more cash that it took in from January, mostly because its revenue suffered a huge drop by $20 billion or 47 percent. The Detroit automaker’s loss amounted to $9.78 per share, compared to a loss of $3.3 billion, or $5.80 per share during the same period a year ago.
The company’s Chief Financial Officer Ray Young said that talk of Chapter 11 bankruptcy has scared new car buyers away from buying GM vehicles. He said that the U.S. government guarantee of GM and Chrysler warranties was not revealed until March 30, so for most of the first-quarter, consumers were unsure about a new vehicle’s warranty protection.
“We cannot cut costs fast enough to offset that revenue loss,” Young said. “People are concerned about bankruptcy, and that’s the reason why we want to avoid it if at all possible.”
GM has received another $2 billion in April in federal aid, bring its total U.S. government loans to $15.4 billion.
– By: Omar Rana