Thanks, But No Thanks: GM Forgoes $2 Billion in Loans

Whew! That's the sound of a collective sigh of relief as world markets and certainly ones here in the U.S take a bit of a breather.

Updated: 10 Oct 2024

Whew! That's the sound of a collective sigh of relief as world markets and certainly ones here in the U.S take a bit of a breather. The Dow Jones Industrial average is up 9.5 percent over 3 days as well as the S&P 500. Other markets like the FTSE 100 and DAX have risen as well. Now to the news that really effects us with interest in the auto industry.

Maybe the sky really isn't falling after all. Today, GM has announced it is withdrawing a request between $1 and $2 billion that it requested to help get through March, a very encouraging sign that it's cost cutting efforts are working and the company is on track.

According to the company, the withdrawal was due to the "acceleration of (GM's) company-wide cost reduction efforts as well as pro-active deferrals of spending previously anticipated in January and February".

They've informed the Presidential Task Force on the Auto Industry of this and I'm sure it's welcome news, and something that should help them secure the rest of the funding needed to survive this crunch.

If that wasn't enough, in addition GM Canada has announced the ratifaction of a new competitive agreement between GM Canada and the Canadian Auto Workers (CAW) union.

This should help Canadian operations (and therefore the whole company) be more competitive. CAW is very difficult to negotiate with; this is a big sign of progress on the labor front.

Also, GM Canada, the CAW and the Canadian government are working together on adopting a similar approach to the GM-UAW healthcare VEBA in the U.S. Other positive news in the rest of the markets include signs that consumer spending might be stabilizing with a drop of only 0.1 percent in February. All hopes for an end of the year recovery seem to be dashed but who knows, it could still happen.

As we all know, a few days of good news doesn't a bull market or economic recovery make, but it's certainly nice to hear something positive (espessially from GM) and to take a break from the continuous, breathtaking market declines.