General Motors posted a massive $15.5 billion second-quarter loss, a widening deficit that underscored the mounting problems facing the giant automaker, Detroit, and the auto industry in general.
The huge loss, one of the worst in industry history, and nearly double the record deficit posted by Ford, last month, was the result of a variety of problems: labor unrest, the collapse of the light truck market, the slump in housing, record fuel prices and the overall slide in new vehicle sales.
The big loss included $9.1 billion in one-time charges, which included $3.3 billion to buy out 19,000 U.S. workers. Another $1.3 billion was written off because of the declining value of the trucks held in the portfolio of General Motors Acceptance Corp., GM’s captive finance subsidiary – which it owns in partnership with the private equity fund, Cerberus Capital Management.
The huge problems facing GM – which slipped to number two in the global sales sweepstakes, behind Toyota, during the second quarter – forced the automaker to announce a new restructuring plan, last month, that will lead to billions of dollars in cost-cutting. Among the targets: a reduction of 5,000 salaried jobs in the months to come.
TheCarConnection.com will have more to come later today.