GM urges ad agencies to slash fees-WSJ
Aug 7 (Reuters) - General Motors Corp (GM.N) has asked its advertising agencies to slash their fees by as much as 20 percent this year and next, the Wall Street Journal said on Thursday.
The Journal, citing several advertising industry executives familiar with GM, said the cuts could translate into more than $20 million in total savings for the biggest U.S. automaker, and were likely to mean layoffs for the agencies involved.
GM works with a number of advertising agencies, including Interpublic Group's (IPG.N) McCann Erickson and Campbell-Ewald.
According to Bernstein, U.S. auto advertising is likely to fall to $15 billion in 2008 from $18 billion last year, the paper said.
Ford Motor Co's (F.N) U.S. ad spending for the first five months plunged 37 percent, while ad outlays by Chrysler LLC in the period sank 31 percent, the paper said, citing the latest data from ad-tracker TNS Media Intelligence.
Representatives at GM, Ford and Chrysler could not be immediately reached for comments.
GM last week reported a $15.5 billion quarterly loss -- its third biggest in over a century -- and burned through $3.6 billion in cash in the quarter as it cut factory output by 27 percent in response to an accelerating downturn in its home market that has hammered sales of its trucks and SUVs.
On Friday Chief Financial Officer Ray Young said GM was on track to free up $15 billion in liquidity with cost-cutting, asset sales and new borrowing under a July plan intended to assure investors that the automaker can ride out the downturn. (Reporting by Tenzin Pema in Bangalore; Editing by Greg Mahlich)
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