U.S. auto giant General Motors Corp. said Tuesday it would suspend its dividend, sell off more assets and cut 20 percent of salaried cash costs to weather a severe downturn in the U.S. market.
"We are responding aggressively to the challenges of today's U.S. auto market," GM Chairman and CEO Rick Wagoner said in a statement.
"Today's actions, combined with those of the past several years, position us not only to survive this tough period in the U.S., but to come out of it as a lean, strong and successful company," he added.
GM's U.S. sales were down 16 percent in the first half of the year. And its stock price had plunged 62 percent this year, to the50-year low.
As part of its cost-cutting, GM will eliminate healthcare coverage for U.S. salaried retirees older than 65, effective from Jan. 1, 2009.
Moreover, GM would suspend its 1 dollar annual dividend immediately, which would increase liquidity by 800 million dollars in 2009. It was the first time the company had suspended its dividend since 1922.
The company also planned to raise 2 billion U.S. dollars to 4 billion through the sale of assets, including its Hummer brand. It also expected to borrow 2 billion dollars to 3 billion by pledging assets including stock of foreign subsidiaries, brands, stake in its finance arm and real estate.
Wagoner said the cost-cutting actions should help GM improve cash flow by 10 billion dollars by the end of 2009.
"The actions announced today are difficult decisions, but necessary to respond to the current auto market conditions," he said.
Source: Xinhua
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