DALLAS – The chief executive of General Motors Corp. dismissed speculation that the largest U.S. automaker might soon seek bankruptcy protection.
Comments in the past week about a potential bankruptcy are “not at all constructive or accurate,” Rick Wagoner said Thursday.
GM has $24 billion in cash and $7 billion in unused credit facilities, he said.
Last week, a Merrill Lynch analyst cut his rating on GM stock and said “bankruptcy is not impossible” if the auto market continues to weaken.
“Under any scenario we can imagine ... our cash position will remain robust through this year” and the company has options for raising cash beyond that, Wagoner said at a lunch meeting of Dallas business leaders.
The bankruptcy speculation has increased and GM stock has been hammered over the past two months, losing more than half its value.
Dealers are worried that the negative chatter will hurt sales, and Wagoner conceded that consumers wouldn’t want to buy cars from a bankrupt company.
“That kind of news isn’t helpful, but as long as we can get the dealers the right information. ... I think we can address it,” he said.
GM shares continued their slide Thursday, falling 64 cents, or 6.2 percent, to $9.69. Last week, GM stock closed at less than $10 for the first time since 1954. The automaker has a truck assembly plant in southwest Allen County and a foundry in Defiance, Ohio.
U.S. vehicle sales have slumped from an annual rate of about 17 million to 15 million this year, and even lower in the past few months.
The mix of vehicles has changed away from trucks and big SUVs to cars.
GM has closed several truck plants and concentrated its production of big sport utility vehicles at the plant in Arlington, near Dallas. SUV sales have plummeted with gasoline at $4 a gallon, and the plant will be idled for several weeks this year to match production with demand.
Wagoner said GM would maintain Arlington’s current production pace “and we’ll see what the future holds. If the market continues to move more to cars, then we’ll further adjust the production plans.”
Wagoner said the trend toward cars in the U.S. market is permanent and his company is planning for the change and for higher oil prices – 18 of the next 19 GM models under development are cars or crossovers, not trucks.
But, he added, the company didn’t foresee oil prices doubling in a year.
“We missed that, but I think us and 99.999 percent of the rest of the people in the world did too,” he said.
