DETROIT -- As General Motors' losses grow, so does the amount it plans to cut on marketing spending.
In a 40-page document of financial results released today, the automaker disclosed that it will slash marketing in North America -- including vehicle incentives -- by $800 million this year alone.
In a December filing, GM had said it would cut advertising and marketing spending in the U.S. by $600 million by 2012. Presumably, that figure did not include incentive spending. In today's document, the automaker said the cuts were necessary due to lower sales volumes.
Chief Financial Officer Ray Young said in an earnings call today that GM had to use a lot of incentives in the fourth quarter to offset the lack of credit from GMAC, but still eliminated leasing in Canada last year and is reducing leasing in the U.S.
"That's an expensive form of incentive," he said.
The losses the company posted today also raise the question of whether the automaker could land in bankruptcy court or submit to a government-prepackaged reorganization. GM reported a global net loss of $30.9 billion for 2008, including a net loss of $9.6 billion in the fourth quarter.
Biggest losses in North America
All four of its regions around the world moved into the red, but the biggest losses took place in North America.
"We really noticed in the fourth quarter the credit crisis spreading around the world," Young said in a conference call this morning. "The global industry downturn really impacted emerging markets, so we did some sizeable production adjustments in December," which resulted in lost revenue.
GM's debt balance ballooned to $45.3 billion in the fourth quarter, which includes the $13.4 billion GM has already received in federal loans since late last year. GM asked Washington for $16.6 billion more in a plan filed Feb. 17, saying it needed another $4.6 billion within weeks and an additional $12 billion more to skirt bankruptcy.
GM reported today that its net liquidity slid from $27.3 billion in the fourth quarter of 2007 to $14 billion on Dec. 31, 2008.
Among the charts GM released today was one outlining its North American structural costs, which it said it will reduce to $26.3 billion in 2009 from $30.8 billion last year.