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Last Updated: Thursday, 20 April 2006, 14:53 GMT 15:53 UK
GM narrows its quarterly losses
GM discount sign at US car dealership
GM has an extensive programme to try and turn the financial corner
Beleaguered car giant General Motors (GM) has remained in the red for the sixth straight quarter - albeit with a much smaller loss than a year ago.

The carmaker lost $323m (181m) in the first three months of 2006, after losing $1.3bn in the same period of 2005.

CEO Rick Wagoner said the carmaker was making progress with its cost-cutting.

GM made a $10.6bn loss in 2005, and in March said sales had fallen 14% on the same month a year ago.

Even so, sales in the first quarter of 2006 were $52.2bn, up from $45.8bn a year earlier.

Cost-cutting plan

Excluding one-time items - but including a $1bn pre-tax healthcare charge to account for payments to a fund created for future retiree health-care costs - GM lost $529m, or 94 cents a share.

Without the health-care charge, GM would have posted a profit of 26 cents a share.

With gas prices rising rapidly, GM's strategy of loading up vehicles with more horsepower and features may prove difficult to sustain
Professor Peter Morici, University of Maryland.

In January GM said it expected to make $4bn (2.2bn) in savings this year from a far reaching cost-cutting plan. It eventually plans to cut annual costs by $6bn.

By 2010 it expects costs as a share of revenues to fall dramatically.

The US car giant has faltered in the face of fierce competition from Asian rivals and changing consumer tastes

In response to dwindling market share in the US market, GM will cut 30,000 jobs and close 12 North American plants, as well as cutting top executive pay.

Labour costs

"GM is making more vehicles and selling fewer of them," said Professor Peter Morici at the University of Maryland.

Mr Morici said during the quarter GM's market share fell from 25.2% to 23.7%, and pointed to figures suggesting that although GM was building more cars, it was selling fewer of them.

"With gas prices rising rapidly, GM's strategy of loading up vehicles with more horsepower and features may prove difficult to sustain," he said.

He also said GM needed to further reduce its labour costs and bring those into line with Toyota and other Asian companies operating in North America.




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