General Motors CEO Rick Wagoner is not yet seeing recovery in the US economy or vehicle sales despite a fall in fuel prices in recent weeks.
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“It still feels to me like we’re in it,” he told Bloomberg News during a classic car event at the weekend, referring to the faltering economy that led GM to announce a US$15.5bn loss for the second quarter.
Wagoner and his management team are working on raising enough cash to see GM through a lean year or so while it restructures with a new focus on smaller, more fuel efficient models to compete more strongly with Asian brands such as Toyota and Honda.
Detroit rival Ford has announced a small car push starting around 2010 while now-privately-owned Chrysler just announced plans to make a key Michigan factory more flexible for a new, more fuel-efficient SUV it will build there, also from 2010.
Wagoner told the news agency GM may seek to modify the method of financing a fund due to be set up by 2010 to rid the automaker of future union retiree healthcare costs. GM has already reached an agreement to delay some cash payments and other cash payments might be modified without delaying the implementation of the fund, he said.
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By GlobalDataGM CFO Ray Young said last week GM may need to restructure the financing of the fund that will save it US$3bn a year after 2010.
“I wouldn’t rule it out if it made sense for everyone to look at that,” Wagoner told Bloomberg.
Last year’s GM-United Autoworkers Union (UAW) contract negotiations resulted in a deal in which the automaker would pay $31.9bn into a Voluntary Employee Beneficiary Association (VEBA) to cover a $47bn healthcare liability.
Bloomberg noted that Young had said, also last week, that GM was trying to speed up $10bn in cuts this year after economic conditions worsened.
