Page last updated at 19:44 GMT, Friday, 7 November 2008

US car giants report large losses

GM vehicles
GM is to shed jobs and cut spending

US carmaker GM has reported a third quarter operating loss of $4.2bn (2.66bn) after Ford announced it lost $2.98bn during the same period.

GM said it would run out of cash in the first half of 2009 if economic and market conditions did not improve.

GM said it would cut jobs and costs and has also suspended merger talks with Chrysler to focus on current issues.

It says about 3,600 workers will be laid off indefinitely early next year as production is slowed at 10 plants.

Ford meanwhile said it would cut salary-related expenses in North America by another 10%.

GM and Ford burned though $14.6bn in cash between them in the quarter.

No acquisition

Detroit-based GM posted a third-quarter net loss of $2.5bn, compared with a loss from continuing operations of $42.5bn a year ago.

Revenue fell to $37.9bn from $43.7bn in the same period in 2007. GM said it would shed white-collar jobs and cut $2.5bn in capital spending in 2009.

Further strong action is needed
Rick Wagoner

Although in its statement it did not specifically refer to Chrysler, GM said it was setting aside considerations for a "strategic acquisition".

Meanwhile Ford's revenues fell to $32.1bn, down from $41.1bn in the third quarter of 2007, as vehicle sales in the US plunged to historic lows.

Ford, which will accelerate plans to produce fuel-efficient cars, said it was looking at various solutions to support its balance sheet.

Rescue plea

The US automakers have called for an industry wide rescue package after facing increasing concerns over the levels of cash needed to continue operations in "difficult economic conditions".

Ford shares have fallen more than 70% in 2008, hitting a 26-year low in October.

GM warned on Wednesday the industry faced meltdown after a "near collapse" in demand for cars.

On Friday GM chief executive Rick Wagoner, in a statement, said: "The US government's actions to help stabilize the credit markets and eventually ease the credit crunch are an essential first step to the economy's and the auto industry's recovery, but further strong action is required."

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