Bankruptcy Fears: GM Sees $6b Loss in Q1
The first quarter of the current financial year was quite shattering for many automakers and most of them had to face untoward financial troubles under the shadows of deepening recession and slow down in sales.
The Detroit-based GM have been looking towards the US Government for a bailout to avoid a possible bankruptcy and this is because of these very fears and slowdown in worldwide sales that the giant automaker had to undergo $6 billion loss in the first quarter of the current financial year.
The company’s revenue cut nearly 50% as most of the buyers had shown concerned that the company would soon announced a bankruptcy and wouldn’t be able to honor its various warranties.
According to GM, it has spent nearly 10b more cash than it got in the month of January and March and it was the basic reason behind this considerable drop in the company’s revenue.
Ray Young, GM Chief Financial Officer, says in this connection: “Most of our consumers seemed quite scared due to bankruptcy fears and this kept them away from buying our vehicles. These concerns deeply impact our sales and we had to bear $6b loss in the first quarter of the current financial year.”
The US government has issued a June 1 deadline to GM to complete its restructuring plan or get into bankruptcy protection.
“The Obama administration didn’t reveal a US Govt. guarantee of Chrysler and GM warranties by the end of March,” Young added.