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Last Updated: Thursday, 10 November 2005, 09:27 GMT
GM reveals $300m accounting error
GM sports utility vehicles
GM has been hit by falling sales
General Motors has said it will have to restate its 2001 financial results after they were overstated by between $300m (172m) and $400m.

The US's largest carmaker said the overstatement was due to an accounting error that caused net income figures to be exaggerated by 25-35%.

It said it had wrongly recognised some supplier credit agreements.

GM, which is struggling against falling sales, said the effect on subsequent annual results would be "immaterial".

It found the error after conducting an internal review of its supplier credits, a matter that was also being investigated by US financial watchdog, the Securities and Exchange Commission.

Supplier worries

GM now plans to issue the restated earnings for 2001, and any affected subsequent years, before it issues its 2005 annual report next year.

Delphi headquarters
Analysts say a strike at Delphi would immediately impact on GM

Reports also warned on Thursday that GM could be affected by a possible strike at its main supplier Delphi.

Staff and unions at loss-making Delphi, which last month applied for Chapter 11 bankruptcy protection, are unhappy at wages and benefits.

"A labour disruption at Delphi for any extended period would have an immediate impact on GM's ability to operate and would quickly reduce liquidity," said credit agency Fitch Ratings.

Tough sales

Delphi was part of GM before it was spun out in 1999.

GM has also already said it could be liable for up to $12bn in benefits for Delphi employees as part of the supplier's restructuring.

The carmaker last month reported a $1.6bn third quarter loss, compared to a $315m profit a year ago. It also saw US sales dip 23% in October.

GM has been hit in the US by an over-reliance upon thirsty Sports Utility Vehicles, sales of which have dropped as petrol prices have risen.

The company has also been affected by higher employee healthcare costs.




SEE ALSO:
GM accounts probed by regulators
27 Oct 05 |  Business
Toyota 'could outstrip GM output'
26 Oct 05 |  Business
Ford plans shake-up after losses
20 Oct 05 |  Business
GM signs health deal with unions
17 Oct 05 |  Business
Ford and GM vehicle sales plummet
03 Oct 05 |  Business


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