New York - US automotive giant General Motors said Wednesday it lost a record 39 billion dollars in the third quarter, virtually the entire amount accounted for by non-cash bookkeeping charges after three years of loses. The world's largest automaker wrote down the value of future tax benefits despite sales that hit a record high in the quarter, allowing GM to retain its market dominance despite increasing competition from Asian automakers.
The loss was the biggest ever for a quarter by GM, and compared with losses of 147 million dollars in the third quarter of 2006.
Difficult market conditions in the US, Canada and Germany prompted the firm to take a valuation allowance against deferred tax assets. The potential tax benefits were in the books after earlier losses and could have been used when the firm returned to profitability. The move signals GM will not have enough earnings to take advantage of the tax benefits, but it could still use them if the financial situation improves.
Also contributing to the losses were red-ink at finance company GMAC, Detroit-based GM said.
"This all suggests that GM thinks that things are so ugly out there that they can't see the possibility of profitability for many quarters, maybe even years," Bradley Rubin, an analyst with BNP Paribas in New York, told Bloomberg financial news.
Even excluding the tax writedowns, GM lost 1.6 billion dollars on its operations in the quarter, after profits of 497 million dollars in the year-earlier period.
Losses were particularly stark in its credit arm, GMAC, where revenues fell to 43.8 billion dollars from 48.9 billion dollars amid problems in the US credit market. GM owns 49 per cent of GMAC.
The situation was better in the automobile portion of GM's business, with net income of 122 million dollars from continuing operations, after a loss of 455 million dollars a year earlier. Auto revenues were up to 43.1 billion dollars.
"We continue to see solid progress in the fundamentals of our automotive business," chief executive Rick Wagoner said.
Revenues in the quarter dropped to 43.8 billion dollars, compared with 48.9 billion dollars in the same 2006 period.
