Hit by tumbling U.S. auto sales and turmoil in its financing business, General Motors reported a $15.5 billion second-quarter loss Friday...
Hit by tumbling U.S. auto sales and turmoil in its financing business, General Motors reported a $15.5 billion second-quarter loss Friday, the latest detour in the auto giant’s turnaround effort.
The loss — $27.33 on a per-share basis — was the third-largest in GM’s history and far exceeded Wall Street’s forecasts. The company’s stock was down about 2 percent to $10.85 in early trading.
A year ago, GM posted a second-quarter net profit of $891 million, or $1.56 a share.
GM said total revenue slid by 18 percent in the three months ended June 30, falling to $38.2 billion from $46.7 billion in the second quarter of 2007. North American revenue fell by almost $10 billion to $19.8 billion.
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The loss was the latest setback in GM’s efforts to turn around its struggling auto operations. High gas prices and low consumer confidence have hammered U.S. auto sales this year.
Separately, automakers reported Friday that their U.S. sales fell by double-digits last month as they struggled to keep up with consumers’ growing demand for smaller, more fuel-efficient vehicles.
Nissan was the only major automaker to report a gain, with truck sales up a surprising 18 percent, thanks in part to the new Rogue crossover.
Automakers were expecting July sales to be at their lowest level in more than a decade as sales of trucks and sport-utility vehicles continued to plummet and new troubles in the auto-leasing market further wrecked consumers’ confidence. And they said things could get worse before they get better.
GM, with its heavy reliance on gas-hungry SUVs and big pickups, has been especially hard hit. Its new-vehicle sales fell 16 percent through the first six months of the year and its share of the U.S. market slid to 21.3 percent from 22.8 percent a year ago.
During the first half of the year, Toyota surpassed GM in global auto sales, grabbing, at least for now, the crown as the world’s largest automaker.
GM executives didn’t provide specific earnings guidance for the rest of the year, but said the company expects “pretty significant head winds” as high gas prices and the weak U.S. economy continue to put pressure on auto sales in general and SUV sales in particular.
Though gas prices are pressuring automakers, oil companies just wrapped up a string of gargantuan, record-breaking earnings reports Friday, with Chevron reporting its second-quarter profit rose 11 percent to a record $5.98 billion. Six of the major international oil companies topped $50 billion in combined profit in a single quarter for the first time.
On July 15, GM announced plans to lay off thousands of workers, eliminate shifts at some of its truck plants, shift production at other plants and — for the first time — begin building a small four-cylinder engine in the U.S.
“We knew what was coming in these results,” GM President Fritz Henderson said in a conference call with analysts Friday. “We knew what we needed to do to respond and react.”
In contrast to its struggles in the U.S., GM said its international sales rose 10 percent during the second quarter. Sales outside North America now account for 65 percent of the company’s revenue.
GM said it has $26 billion in cash and credit facilities available. Analysts have been keeping a close eye on the automaker’s liquidity amid concerns that it can continue to fund its global operations at a time when its revenue is falling.
Material from The Associated Press was used in this report.