To Save Itself Gm Plans To Raise 5 Billion
Cash strapped General Motors has been losing tens of billions of dollars these past few years as the company seeks to find its footing in a rapidly changing market. With domestic sales down for the year by almost 18 and its most profitable vehicles selling at heavily discounted prices the automaker is finding that it needs a bundle of cash to move forward something that it just doesn’t have.
However the automaker has a plan in place to raise as much as five billion dollars by selling noncore assets and divesting itself of at least one of its brands. Though nothing has been set in stone just yet the following deals could help GM raise that money quickly:
- Sell Its Headquarters Just this past May GM purchased its headquarters for 626 million. Now GM is looking to sell it off and lease it back in a bid that would give the company at least 500 million. On the surface it would appear that GM would lose money in the transaction but they would recoup at least an important tax write offs too.
- Close and Sell Excess Plants GM owns quite a bit of property across the US and in Europe some of which included already shuttered assembly plants which can be sold to raise cash. GM is looking at selling property in France and has other property across the continent that can be off loaded.
- Sell Hummer GM has been actively shopping Hummer realizing that the big SUV brand’s days are numbered. Likely GM will not fetch much money for Hummer but it’ll rid itself of a product line that is a drag on its earnings.
- Seek Tax Breaks Though this method doesn’t raise cash GM will be saving tens of millions of dollars over the coming decades thanks to securing property tax abatements at new or updated plants in Michigan and Ohio. In exchange for investing in new assembly plants GM will be receiving concessions from state and local governments to maintain or move production to these facilities.
Talk about GM closing out one of its other brands as it did with Oldsmobile in 2003 is merely that just talk. The automaker learned that it costs too much money to buy out dealers and discontinue a brand but selling a brand such as Hummer is the most cost effective move for the company.
In all GM must raise cash and do it quickly especially as it funds its breakneck shift to smaller cars. With the Chevrolet Volt project costing billions the cash will come in handy as well as help the automaker navigate through one of the worst economic climates in decades.
About the writer: Matthew C. Keegan is a freelance writer who resides in Cary North Carolina. Matt provides magazine web content and article writing services to clients all over the world serving the automotive human interest and business communities. Auto Trends is his automotive weblog.
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