General Motors (GM) confirmed on Friday (7th November) that it recorded an operating loss of $4.2 billion during the third quarter.

The company has suspended planned merger talks with Chrysler and has been forced to slow production at ten plants, meaning around 3,600 workers will be laid off in early 2009.

In addition, Ford posted a loss of $2.98 billion for the same period and also confirmed that it will be slashing its salary-related expenses by ten per cent in North America.

Demand in the US markets has slumped so badly that there are now calls for president-elect Barack Obama to provide a bailout plan for GM, Ford and Chrysler.

As GM Chief Executive Rick Wagoner explained: "The US government's actions to help stabilise the credit markets and eventually ease the credit crunch are an essential first step to the economy's and the auto industry's recovery, but further strong action is required."

The 'Big Three' are proposing fresh loans of up to $50 billion to avoid around three million jobs being cut after sales plummeted to their lowest levels for 25 years.

Analysts are claiming that 2.5 million jobs would be lost even if the three automakers cut their production in half and that such a move would still cost the government $100 billion over three years.

With the very real possibility that the companies could run out of cash, president-elect Barack Obama has been urged to use his critical 100 days to save the US auto industry.

Meanwhile, the strain is also being felt elsewhere, after it was confirmed yesterday that passenger car sales in India declined by 6.6 per cent during October - the highest drop in three years.

The Society of Indian Automobile Manufacturers, the body which provided the data, also claimed that overall vehicle sales were down by 14 per cent, the biggest decrease for nearly eight years.

In addition, production in the country - which is one the fastest-growing automarkets - was down by 12.32 per cent on a year-on-year basis and annual sales of domestic passenger cars fell by 9.1 per cent.

Dilip Chenoy, the Director General of the group, explained that an interest rate cut and lower reserve requirements have not done enough "at this stage" to help lending to dealers.



Sources:

US car giants report large losses (07/11/08)
http://news.bbc.co.uk/1/hi/business/7715896.stm

100 days to save the American car industry (08/11/08)
http://www.guardian.co.uk/business/2008/nov/08/ford-general-motors-chrysler-detroit-automotive-industry

India Car Sales Fell in October as Dealers Struggle for Funds (10/11/08)
http://www.bloomberg.com/apps/news?pid=20601091&sid=a.ByT1ftq2mY&refer=india

Brakes put on Indian car making (10/11/08)
http://news.bbc.co.uk/1/hi/business/7719486.stm