Wednesday, April 5, 2006
From Yesterday's Detroit Free Press:
On Monday, GM reported a 14.4% drop in its U.S. car and truck sales, causing its share of all U.S. sales to fall to just 23.3% from 26.7% in March last year.
However, GM's new line of large SUVs, a key driver of profits, posted another strong month of sales, partly offsetting a sharp drop in car sales.
Investors also have been spooked by growing accounting problems at GM. The automaker said last month in its annual financial report, filed with regulatory authorities nearly two weeks late, that a federal grand jury and the Securities and Exchange Commission have both issued subpoenas to GM.
The automaker also said that it found "material weaknesses" in its accounting practices after completing an internal investigation of its bookkeeping.
The accounting problems were the last straw for some critics already upset by GM's missteps, including a $2-billion payment to Italian automaker Fiat SpA to end a troubled relationship.
"Under Mr. Wagoner, age 52, GM has written off billions of dollars in disastrous foreign alliances, seen fully one-sixth of its U.S. market share melt away and watched its bond ratings sink below banana-republic levels," Paul Ingrassia, Dow Jones Newswire president and the former Detroit correspondent for the Wall Street Journal, wrote in an editorial in the newspaper last week titled "General Malaise."
Ingrassia predicted that the GM board would remove Wagoner by this summer.
Others said that the SEC investigation of GM's accounting problems raises troubling questions about the automaker's bookkeeping and leadership at a difficult time.