General Motors, following US treasury autos task force directions, is close to a deal with the United Auto Workers that would cut its hourly labour costs by more than US$1bn a year, the Wall Street Journal has said, citing anonymous sources familiar with the matter.

GM expects to halve its remaining cash spend for retiree health costs to about $10bn and supplement that contribution with a 39% equity stake in the reorganised company, the sources were reported to have told the paper.

GM and the union could finalise terms as early as next week, the paper said.

GM has recently been talking with the UAW on a new contract and new payment terms for the $20bn it owes the union for retiree health care.

Reuters attempts to reach GM and UAW after normal business hours were unsuccessful.