DETROIT, Nov 17 (Reuters) - General Motors Corp (GM.N) said on Monday it would delay incentive payments to its U.S. dealers by two weeks in an effort to “gain some cash liquidity” for the fourth quarter.
The payments for dealer incentives, which are made on a weekly basis, will be delayed from Nov. 28 until Dec. 11, with the two weeks of incentive payments pushed into the first quarter of next year, GM spokesman Pete Ternes said.
The move comes as GM and other U.S.-based automakers have stepped up lobbying efforts for additional $25 billion in federal loans, which they say is imperative for the industry to survive a deepening liquidity crisis.
GM, which burned through $6.9 billion in cash in the third quarter, has warned it will run desperately short of cash by early next year without government aid or other drastic measures.
GM spends billions of dollars annually on incentives and makes weekly payments, usually on a Friday, to its 3,600 U.S. dealers for vehicles the dealers sold the previous week.
Ternes declined to give an estimate of the delayed incentives, but said the retiming of the payments is a “minor motification to a small percentage of those funds.”
Auto industry tracking firm Edmunds.com estimated that GM spent about $3,716 per vehicle in incentives in October, up from $3,058 a year earlier.
“In this cash crunch, we have examined every aspect of our business in an effort to improve cash flow, including our relationships with all of our key stakeholders, like suppliers, agencies, employees and dealers,” GM U.S. sales chief Mark LaNeve told dealers in a letter sent on Monday.
“This liquidity crisis has an obvious effect on all of us. As you are aware we are asking the federal government for some temporary relief,” LaNeve said in the letter, seen by Reuters.
GM announced additional steps to increase liquidity earlier this month as it posted a bigger-than-expected quarterly loss and an accelerated cash burn. But it said that even with those moves, liquidity would be near the minimum needed to run its business through the rest of 2008.
Reporting by Soyoung Kim; Editing by Bernard Orr