GM Posts Significant Third Quarter Losses

General Motors (GM) recently reported an adjusted net loss of $4.2 billion (or $7.35 per share) for the third quarter. 

GM cited “tight credit, rising unemployment, declining income, falling stock markets, and continuing deterioration in the housing market in the U.S.” and ”the turmoil in the global credit markets” as the main causes for decreased consumer spending and the exiting of many potential customers from the automotive market.

While GM looks to see increased revenue in the fourth quarter, the company noted that within the first two quarters of 2009, its liquidity has the potential to “fall significantly short” of the minimum amount necessary to operate its business, unless there are substantial changes in the market. 

The losses come at a time when many automakers such as GM and Ford are looking to create larger fleets of energy-efficient vehicles, partly due to added pressure from consumers who have been quick to purchase more fuel-efficient cars, such as hybrids, from foreign automakers.

With 27 million cars worldwide reaching the end of their usable lives each year, this number has the potential to rapidly climb as new automotive technologies replace older, less fuel-efficient models. Recycling of these end-of-life vehicles (ELVs) will become increasingly important, as over 80 percent of all automobiles are recyclable, making them a valuable commodity in the post-consumer market.