Here's the story in GM's oil price woes...
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A long row of unsold H3s sits at a Hummer dealership in Castle Rock, Colo., on Sunday, July 6, 2008. GM already has decided to study the sale of its Hummer brand. The big trucks aren't the right product for consumers facing $4 per gallon gasoline.
(AP Photo/David Zalubowski)
DETROIT - General Motors Corp. is reviewing its brands and may try to jettison some to raise money as it burns through cash at an alarming rate.
But industry analysts say buyer interest in the brands most likely to be sold — Buick, Hummer, Saab and Saturn — may be low due to a U.S. sales downturn brought on by high gasoline prices and a slow economy.
Also, analysts say, there are individual problems with some of GM's weaker nameplates.
GM, which has eight brands, announced last month that it was reviewing Hummer for possible sale. The company on Monday denied that other nameplates are under review.
But a person familiar with GM's internal discussions says brands other than Hummer are being studied. The person wanted to remain anonymous because no decisions have been made.
GM, the person said, also is considering wider white-collar job cuts and bringing more small cars to the U.S. from elsewhere in the world to deal with the sales slump a huge market shift from trucks and sport utility vehicles to cars and crossovers.
David Healy, an auto analyst with Burnham Securities, said GM has enough money to make it through this year but may need more cash in 2009. The automaker, he said, has ways to raise money other than selling brands.
While Hummer is unique in terms of engineering and manufacturing and could be sold, other brands share vehicle underpinnings and manufacturing and are so integrated it would be tough to sever them, Healy said.
He questioned whether there would be any buyers in the midst of a U.S. economic downturn.
Hummer might be attractive to a Russian or Indian automaker for its U.S. dealership network, said Mark Warnsman, an analyst with Calyon Securities.
Saturn could be of interest to another automaker that doesn't have a mainstream brand, and a luxury automaker might have the expertise to revive Sweden's Saab, analysts said. Buick might be a tougher sell, they said.
Buick and Saturn continue to struggle despite having revamped model lineups and some of GM's best vehicles, said Tom Libby, senior director of industry analysis for J.D. Power and Associates.
Saturn, born in 1990 as GM's small-car answer to the Japanese automakers, was remade over the past three years with more upscale models, but sales this year are down nearly 19 percent.
"Saturn, to me, it's got this identity problem," Libby said. "It's not clear what it is. That's not going to go away with a new owner."
Saturn General Manager Jill Lajdziak told reporters after a Habitat for Humanity event in Detroit on Monday that a potential sale of Saturn is "not in the cards."
Lajdziak said Saturn sales were actually up 9 percent in June excluding the Ion small car that was discontinued last year.
Buick for years has sold mainly to senior citizens but now has some new vehicles such as the Enclave crossover that are selling well.
"To discontinue the brand right after that is certainly bad timing," Libby said.
Buick sales are down 21 percent so far this year, while Saab sales are down 29 percent.
Warnsman said GM already is consolidating brands by reducing the number of models and putting two or three brands into separate marketing operations.
Healy said GM probably will have to make further blue-collar job cuts as the market continues to decline. The company announced last month it would close four truck and sport utility vehicle plants and boost production of several existing car models. Its sales are down 16.3 percent this year.
Further job cuts could be considered by GM's board of directors when it meets in early August, The Wall Street Journal reported Monday.
GM spokeswoman Renee Rashid-Merem said Hummer is the only brand being discussed for possible sale. She would not comment on job cuts but said the company has made it clear that action would be taken if the U.S. auto market worsened.
GM shares dropped briefly Monday afternoon to $9.92, tying their lowest point since Sept. 13, 1954, according to the Center for Research in Security Prices at the University of Chicago. The price is adjusted for splits and other changes.
The stock rebounded later in the day to close at $10.24, up 12 cents or 1.2 percent. It has traded as high as $43.20 in the past year.
Ford Motor Co., GM's principal U.S. rival, recently sold its Jaguar and Land Rover brands to raise money. The company on Monday wouldn't comment on a Chinese business journal report that China's Chery Automobile Corp. is interested in buying Ford's Volvo unit.
Spokesman Mark Truby said Monday that Ford decided last year to concentrate on improving Volvo's business performance, rather than selling it.
The Associated Press has sought comment from Chery.
Ford shares closed up 5 cents, or 1.1 percent, at $4.47.
JPMorgan analyst Himanshu Patel last week predicted GM will burn through $18 billion in 2008 and 2009 as it struggles with depressed U.S. sales.
GM has $24 billion in cash and $4.6 billion in credit on hand, he said, so it doesn't need to raise more money immediately. But he predicted the automaker will try to raise another $10 billion in the third quarter of this year by mortgaging trademarks, international operations and other assets.
Critics have said GM still has too much fat in its middle management, despite cutting white-collar employment to 32,000 last year from 44,000 in 2000. They also say the engineering, manufacturing and marketing costs are too high for it to keep all eight of its brands.
GM could simply cancel a brand like it did with Oldsmobile in 2004, but Warnsman said that was costly and something GM can't afford right now.
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Associated Press Writer Margaret Harding contributed to this report.
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