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Monday, November 10, 2008

GM Chrysler Deal is Off

DETROIT - General Motors has ended talks with Cerberus to acquire Chrysler LLC, GM CEO and chairman Rick Wagoner said Friday afternoon, without specifically naming Chrysler. "We're setting aside such an acquisition as a near-term priority," Wagoner said.

GM announced $5 billion in "additional enhancement initiatives," Friday, which means cutting employees and programs and reducing other capital spending. The savings are to be piled onto its $10 billion in savings and cash-raising activities, including selling Hummer, announced last summer. Selling cars and trucks has done nothing for raising cash, though, as GM reported a net loss of $2.5 billion in the third quarter of '08. Ford Motor Company lost $129 million.

Both of these numbers would have been much worse, if not for an accounting adjustment connected to the 2007 United Auto Workers settlement pertaining to retiree health care. If not for that adjustment, GM would have lost $4.2 billion, while Ford would have lost $2.9 billion.

Other big news in GM's Q3 statement is an indication that it has not put the Chevy Cruze on hold for a mid-2010 release in the North American market.

I'll have more following GM's conference call Friday afternoon.