Beleaguered automaker also plans asset sales, aiming for $10 billion in 'cash improvements' by 2009. CEO Wagoner says 'difficult decisions' necessary for survival.
NEW YORK (CNNMoney.com) -- General Motors Corp. said Tuesday it will suspend its dividend, sell off $4 billion to $7 billion worth of assets and cut 20% worth of salaried cash costs in an overall plan to save billions of dollars.
"We need to take some very tough actions to ensure our survival and success," said Chief Executive Rick Wagoner, in a press conference, referring to the current market conditions as an "unprecedentedly difficult time."
GM (GM, Fortune 500) stock dropped about 5% on the news.
In an earlier broadcast to employees, Wagoner said that these were "difficult decisions," but necessary for the company to prevail in the weak economy beset by high oil prices, which he called GM's "greatest concern."
Wagoner said the cost-cutting actions should help GM generate $10 billion in "cash improvements" by the end of 2009. Overall, the company plans to beef up liquidity by $15 billion through 2009.
At the end of the first quarter, GM said it had $23.9 billion in liquidity and access to $7 billion worth of U.S. credit, which is enough funding to get through 2008. But the company said it is gathering more liquidity to protect itself from a "prolonged U.S. downturn."
"Our plan is not just a plan to survive; it's a plan to win," said Wagoner, noting that raised cash could aid the company in shifting from trucks and SUVs to more fuel efficient cars.
"Our stated goal is to become the fuel economy leader in every sector in which we participate," said Robert Lutz, GM's vice chairman of global product development.
