General Motors Europe´s financial health deteriorated sharply during 2008 as the carmaker suffered an “adjusted” pretax loss of $1.6 billion, compared with an “adjusted” pretax profit of $55 million in 2007.
GM Europe blamed lower unit sales, a poorer mix of models sold and “unfavorable” foreign exchange for the loss.
GM Europe´s full-year revenues slipped to $34.4 billion during the year, down from $37.5 billion in 2007.
Add to this the sight of its workers protesting on the streets and the fact that the group as a whole posted a $9.6 billion net loss in the fourth quarter, a period in which its sales plunged and it needed a federal bailout to avoid filing for bankruptcy, then things are looking bleak.
GM also warned of a “challenging” year ahead as it posted a massive 30.9-billion-dollar loss for the whole of 2008. This brings the tally from four consecutive years of bleeding balance sheets to a whopping 86.6 billion dollars.
The company also disclosed that its auto operations burned through $5.2 billion in cash during the last three months of the year. The company ended the quarter with cash of $14 billion.
If not for the $4 billion federal loan it received in the quarter’s closing days, GM’s cash level would have fallen below the $11 billion to $14 billion in cash the company has said it needs to continue operations.
It is staggering how bad things have become so quickly and we can only presume that GM was a basket case long before the global recession took hold.