US carmaker General Motors has just reported a massive US$ 39 billion loss during the three months ended September 2007, far higher than was expected, thanks to the combined effect of slowdown in the US car market, a strike by its workers, losses in its financing arm GMAC and a write down of tax credits.
Only a gain from the sale of its Allison Transmission unit stopped the loss from being worse. This loss was significantly larger than the US$12.4 billion net loss posted by GM for all of 2005 and 2006, when the company’s high labour costs hit its bottom line very hard.
The company had a net income of $953 million for the first six months ended June 2007 before hitting the problems in the third quarter. Ironically during the third quarter, GM regained its title as world leader in passenger car sales with 2.38 million units sold compared to 2.34 million by Toyota.