GM CEO says liquidity position is "solid"

By Poornima Gupta and Nick Carey

DETROIT (Reuters) - U.S. automaker General Motors Corp (GM.N) has adequate cash to fund its operations even without potential low-cost government loan guarantees for the auto industry, Chief Executive Rick Wagoner said on Tuesday.

"Our current liquidity position is solid," Wagoner told Reuters in an interview on the sidelines of an event held in Detroit to celebrate the company's 100th anniversary.

GM has been hit by the downturn in two of the weakest sectors in the U.S. economy: autos, and housing through its remaining 49 percent stake in its former finance arm GMAC.

Wagoner also said GMAC was adequately funded.

GM is targeting cost reductions of $10 billion, and up to $5 billion in a combination of asset sales and new borrowing to shore up its liquidity between now and the end of 2009 as it turns around its operations.

"We put that plan together several months ago under what we thought were pretty conservative scenarios," he said. "The plan did not comprehend the loans from Washington because it was uncertain at that point.

U.S. automakers have been lobbying for $25 billion in low-interest loans backed by the U.S. government for new fuel-saving technologies.

The framework for that loan program was included in last year's energy law that established the first large increase in U.S. fuel economy targets since standards were introduced more than 30 years ago.

Wagoner told reporters earlier that $25 billion was a "fair amount" for the auto industry.

GM's Chevy Volt plug-in electric vehicle, the production version of which was unveiled by Wagoner earlier on Tuesday, could be one of the vehicles that could potentially benefit from the government loan program.

The Volt, which seats four people and features a touch-sensitive entertainment center, can be recharged by plugging it into a standard electric outlet.

Wagoner said the vehicle is an important symbol of the company as it moves into a new era.

GM's U.S. sales have dropped 18.5 percent in the first eight months of 2008 as consumers pulled back from the SUVs and light trucks where its line-up is strongest.

Overall, U.S. light vehicle sales have slipped 11 percent through August, hurt by a combination of high gas prices, tight credit and slow U.S. economy.

Wagoner said the automaker expects 2008 U.S. industry-wide auto sales to come in at around 14 million light vehicles, but it was "very difficult" to predict U.S. auto sales for 2009 because of the current economic environment.