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GM marques such as Cadillac are losing ground to foreign
rivals |
Flagging sales and the rising cost of employee healthcare pushed
General Motors to a net loss of $1.1bn (£576m) in the first three months
of 2005.
The world's biggest carmaker warned in March it would drive deep into
the red, but the loss - the worst since 1992 - is at the top end of its
prediction.
In the same period last year, GM made a profit of $1.2bn.
The headline figure includes several one-off costs such as 12,000
layoffs in GM's operations in Europe.
Its Opel and Saab units are having trouble turning a profit, while
extricating itself from a deal which could have forced it to buy Fiat is
also hurting the company.
Ahead of Wall Street's opening, pre-market trade marked GM shares down
2.1% to $25.65. Arch-rival Ford is to report results on Wednesday, which
are also expected to disappoint.
The North American market - the world's biggest - is the source of GM's
biggest problems.
With GM's Buick, Cadillac and Chevrolet cars losing out to foreign
brands, chief executive Rick Wagoner took personal charge of daily
operations there earlier this month.
Sky-high oil prices are also causing the firm
problems, and some analysts believe the US's long infatuation
with gas-guzzling sports
utility vehicles may be running out of steam.
In addition, the firm had to recall almost 200,000 vehicles in the US
in February because of a potential problem with the brake system, while a
government watchdog is investigating reports of tailgates falling off GM
pickup trucks.
Losses in Europe were offset by $60m in profits from Asia as market
share in Japan and China grew - although cut-throat competition and
thinning margins meant profits in Asia were down more than 75%.
"While most of our business units exceeded expectations, the results at
GM North America were clearly disappointing," Mr Wagoner said.
But he promised investors "well thought-out plans" to deal with the
problems, including "aggressive" new model introductions and marketing.
He also promised to tackle the company's huge healthcare costs -
although so far negotiations with unions have failed to produce the
results the firm wants.
(BBC) |