Regardless of whether or not you want to consider the current domestic economy in a state of recession, there is little debate as to which companies have been getting hit the hardest. Just today General Motors Corp reported some numbers that could make anybody a little queasy (accounting background or otherwise). GM posted a $15.5 billion quarterly loss derived in part by a 20 percent drop in North American sales. <\/p>\n
Not only are fewer individuals purchasing new cars due to a slumping economy but high oil prices are causing a massive drop-off in SUV demand. Lower demand means plunging prices for these larger truck-bodied gas-guzzlers (which have up until recently, accounted for a majority of the company\u00e2\u20ac\u2122s profit margins).<\/p>\n
So what\u00e2\u20ac\u2122s an automotive giant to do? Why discount, discount, discount! The Number 1 U.S. automaker burned through an additional $3.6 billion in cash over this same period as it reduced its inventory of slower-selling vehicles in its slumping domestic market. Though not quite as dramatic, GM’s global auto sales suffered as well with a decrease of 5 percent (coupled with a $4 billion loss on international auto operations).<\/p>\n
So what does the future hold for the struggling manufacturer? Greener ambitions through hybrids, flex fuel engines, and renewable resource designs. While GM (and other automakers) are at the drawing board attempting to jump on the trend as quickly as possible, many analysts predict that fiscal recovery from such endeavors will not become a reality until 2010 at earliest.<\/p>\n
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