Aug 7 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
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
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