Faced with the worst market for auto sales in a decade, and the lowest shareholder price the company has seen in half a century, General Motors officials are preparing a turnaround plan intended to save America's largest automaker. According to the AP, the company "plans to lay off salaried workers, cut truck production, suspend its dividend and borrow $2 billion to $3 billion as it adjusts to a declining U.S. market."  Company officials believe "the moves will raise $15 billion to help turn around its North American operations."  The plan was announced to employees Tuesday morning.

GM is working to adjust its product line to the realities of $4 gasoline.  Bloomberg reports, "GM has said it is delaying plans to design future large pickups and sport-utility vehicles and is studying whether to bring a car to its home market that is smaller than any currently sold."  Chevrolet will debut its new Cruze small car for the 2010 model year, which the automaker claims will get 40 mpg.  The company has also invested heavily in the development of the Chevy Volt, a hybrid-electric vehicle expected to reach showrooms that same year.

GM has already announced plans to shutter four truck and SUV plants, and has retained Citibank to study the possibility of selling, or simply discontinuing, its Hummer brand.  CNN Money notes, "GM has lost about one third of its 107,000 U.S. hourly workers since 2004. GM offered buyouts to its entire remaining U.S. hourly workforce of 74,000 in February, in a bid to unload its more experienced, higher-paid employees."

BBC News adds, "Recently one US investment bank warned it was 'not impossible' that GM would go bankrupt."  Tuesday's announcement was designed to help ease those fears.  "Some analysts have predicted GM will need to raise $15bn to ride out the downturn in car and truck sales," exactly the figure Wagoner told employees these new moves would raise.

There are bright spots for GM.  CNN Money notes, "Despite the doom and gloom in America, GM's sales edged up in Europe by 3% in the first six months of 2008, including a 58% increase in Eastern Europe and a 60% surge in Russia."

Still, it isn't yet clear how markets will respond to Tuesday's announcement.  The Detroit Free Press comments that Wagoner's plan "amounts to its second restructuring announcement in six weeks."  No announcement had been expected until the company's next scheduled board meeting in August, "but GM is under pressure to act fast."

A separate AP report says the company faces "pressure from Wall Street for GM to cut some of its eight brands," but eliminating a brand is not a simple or cost-free maneuver for an automaker. 

An earlier Wall Street Journal report noted, "Chrysler several years ago paid handsomely to kill off the Plymouth brand. In a widely publicized move, GM pulled the plug on the vaunted Oldsmobile brand in 2000. GM spent $1 billion alone in 2001 to buy out Olds dealers and wind down some plants. Litigation with hundreds of Olds auto dealers dragged on for years and the final tally is estimated at close to $2 billion."

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