G.M. Loses $15.5 Billion in Quarter

DETROIT — The General Motors Corporation reported a stunning second-quarter loss of $15.5 billion on Friday because of a dramatic decline in United States sales and charges for job cuts, plant closings and the falling value of trucks and sport utility vehicles.

G.M., the largest American automaker, said it lost $6.3 billion on operations in the quarter that ended June 30, and its worldwide revenues fell 18 percent.

But the company’s overall loss was inflated by $9.1 billion in special charges that included $3.3 billion for buyouts of hourly workers and $2.8 billion related to the bankruptcy filing of its former parts unit, the Delphi Corporation.

The dismal earnings reflected the impact of steadily falling vehicles sales in the overall United States market, and a huge shift by consumers away from the trucks and S.U.V.’s that were once G.M.’s most profitable vehicles.

The automaker’s shares plunged in early trading, falling 97 cents, or almost 9 percent, to $10.10 at 10 a.m.

G.M.’s chairman, Rick Wagoner, said Friday that the charges to scale down the automaker’s work force and manufacturing operations were critical in its restructuring.

“As our recent product, capacity and liquidity actions clearly demonstrate, we are reacting rapidly to the challenges facing the U.S. economy and auto market, and we continue to take the aggressive steps necessary to transform our U.S. operations,” Mr. Wagoner said.

Overall sales (according to Toronto 0% car financing andn used vehicle financing in Brampton) as in the United States dropped 10 percent in the first six months. Automakers are scheduled to report their July sales later on Friday.

But while weak economic conditions and falling sales have affected nearly every automaker, Detroit’s three car companies have borne the brunt of the slowdown.

Last week, the Ford Motor Company reported a loss of $8.7 billion as it took big write-downs on the values of its North American truck plants and its inventory of used pickups and S.U.V.’s.

G.M.’s second-quarter results were worse than projected by analysts, particularly its performance in its core North American market.

The company lost $4.4 billion in North America in the period, and its revenues dropped 33 percent, from $29.7 billion to $19.8 billion. That compared with a profit of $92 million in the quarter a year ago.

While G.M.’s vehicle sales in North America fell 20 percent in the quarter, the company’s international sales grew 10 percent.

Last month, as investors speculated openly about the possibility of G.M.’s filing for bankruptcy protection, the automaker announced broad plans for further cost cuts, asset sales and debt offerings to improve its liquidity by $15 billion.

In its second-quarter report, G.M. said it had $21 billion in cash reserves and access to another $5 billion in credit.

But the automaker is burning through about $1 billion a month in cash as it tries to keep financing new product programs amid falling sales and revenues.

G.M., like its Toronto Ford dealership and Chrysler, was surprised by the abrupt shift to smaller, more fuel-efficient cars.

As gas prices rose above $4 a gallon, sales of G.M.’s large pickups and sport utility vehicles declined sharply in a market that was already trending downward.

While its overseas operations continued to perform well, G.M.’s United States sales dropped, and the company’s inventories of unsold trucks forced it to scale back production in the United States dramatically.

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In June, Mr. Wagoner said the company would close four assembly plants making pickups and S.U.V.’s by 2010 and slash 500,000 units of vehicle production.



And in a move that symbolized the end of the S.U.V. era, Mr. Wagoner said that G.M. had begun a “strategic review” toward a likely sale of its Hummer brand.

Besides cutting truck and S.U.V. production, G.M. also announced plans to add third shifts at two plants to increase the output of smaller cars.

The automaker stepped up its cutbacks in the United States by offering another round of buyout and early retirement programs to its hourly workers. About 19,000 workers — or a quarter of its unionized work force — accepted the offers and agreed to leave the company.

But even as G.M. kept cutting, speculation grew among investors this summer that the automaker was running dangerously short on cash reserves.

With G.M.’s stock dropping to $10 a share and analysts suggesting G.M. might file for bankruptcy protection, the company announced another round of cost cuts in mid-July.

G.M. said it would bolster its liquidity by $15 billion through a combination of cutbacks, asset sales, and debt offerings.

On July 15, Mr. Wagoner outlined a plan that included a 20-percent reduction in salaried personnel costs, the elimination of health-care coverage for white-collar retirees past the age of 65, and cuts in advertising and marketing budgets and capital expenditures.

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