GM Cash Burn: $1b Per Month

Robert Farago
by Robert Farago
gm cash burn 1b per month

The Wall Street Journal [sub] has been busy reporting CEO Rick Wagoner's new new turnaround plan, which looks an awful lot like his last turnaround plan, which is based on the principle "Yes, you CAN cut your way to prosperity." Set for unveiling next Tuesday (June 3), "New restructuring actions could include the elimination of some slow-selling models. Mr. Wagoner also will unveil plans to boost revenue." For this you buy a subscription? Obviously not. At the bottom of the report, we get the money shot: "Some analysts, however, fear GM may be headed for rougher waters given its dwindling cash position. As of March 31, GM reported $24 billion, or $6 billion less than what was on hand September 31." Holy cash conflagration Batman! I make that a $1b per month cash burn. Do the math. Or hear this: "Mr. Gilbert [a fixed income analyst at Principal Global Investors] said that if GM doesn't figure out a solution, it may be headed down the same road as the airline industry, which saw several carriers file for bankruptcy protection in recent years. 'Liquidity is the one thing that always separated the two (industries)… If that goes away, the two will look a lot more similar.'"

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  • Bunter1 Bunter1 on May 29, 2008

    1.4 million per hour. Ouch. Sure there are some one time items. Recent history indicates there always are. Rix- Excellent question. Next question, do they tend to tell us an estimate that is optiminstic or pessimistic. I know where my vote goes. Mikey-I have been in a similar situation and truely feel for you. Wish the news was better. Seriously, look into what you can learn on wealth creation. Take care. Bunter

  • on Dec 12, 2008

    [...] accomplished. GM should have seen this coming earlier this year, but did nothing to prevent it. This article in May reported GM burning through it’s cash at a rate of $1 billion per month, and [...]

  • on Dec 13, 2008

    [...] cash than it’s taking in, drastic changes to the business model should come quickly. Yet GM knew for months this crisis was approaching and did nothing to prevent it! Why would they when they thought if things got bad you and I would [...]

  • on May 02, 2009

    [...] The problem with the American giants was smoldering long before the current economic crisis flared up. GM posted record sales in 2007, but also record losses that same year. Figures are harder to come by for Chrysler because it’s not a publicly traded company, but its former owner Daimler has released some figures that show its problems began long before the current downturn. The company lost $3 billion in 2007 and $1.6 billion in 2006. In May of last year, it GM was burning cash at a rate of $1 billion a month. [...]