General Motors has offered voluntary redundancy to its 74,000 unionised workers after posting a record loss of $38.7bn (£19.8bn) during 2007.
Unionised workers are being offered a deal
During the last three months of the year, it made a net loss of $722m, down from a profit of $950m a year earlier.
Revenues also fell during 2007, to $181bn from $206bn in 2006, in spite of a rise in the number of vehicles sold.
GM is in the process of cutting costs as it tries to bounce back from weak sales and profits in the US market.
It blamed most of its losses on a one-off tax charge, but a miserable performance at consumer finance firm GMAC, in which it has a 49% stake, also acted as a drag on full-year earnings.
GMAC's home lending unit suffered badly from high mortgage defaults and more expensive home loan costs, and caused GMAC to post a loss of $2.3bn for 2007.
GM reached a historic deal last year with the United Auto Workers (UAW), the main US car union that represents 74,000 of its workers in North America over a new four-year labour contract.
The agreement allows GM to embark on a major restructuring mission, cutting its pension and healthcare liabilities and allowing it to employ staff on much lower salaries than at current levels.
As part of plans to transform its work force, it has offered its workers who are eligible to retire $45,000 for production staff and $62,500 for its most skilled workers.
Other UAW members with 10 years or more service can opt for a one-off payment of $140,000 to leave the company with no further benefits. Workers with less than 10 years at GM can choose to accept a $70,000 pay out.
GM hopes to derive cost savings of between $4bn-$5bn by 2010 in the US from the 2007 GM-UAW contract, which includes shifting its healthcare benefits to an independent fund.
GM's chief executive Rick Wagoner called 2007 a year of "important progress" with sweeping cost reductions in its US operations and aggressive growth in emerging markets.
"We're pleased with the positive improvement trend in our automotive results, especially given the challenging conditions in important markets like the US and Germany," Mr Wagoner said.
"But we have more work to do to achieve acceptable profitability and positive cash flow," he added.
GM's worldwide vehicle sales increased 3% to 9.4 million vehicles in 2007, marking the second best year in units sold in the company's 100-year history, it said.
Record sales growth was achieved in Eastern Europe, Latin America and the Asia Pacific region.
GM managed to retain its crown last year as world's top carmaker, keeping its Japanese rival Toyota at bay.
But Toyota's sales growth outpaced GM's, climbing 6%.