GM says bankruptcy 'out of the question'

NEW YORK - General Motors has never thought about filing for bankruptcy and Chief Executive Rick Wagoner is the "right man" to lead the automaker's turnaround efforts, GM's vice chairman of global product development, Bob Lutz, said today.

"Bankruptcy is totally out of the question," Lutz told reporters on the sidelines of the New York International Auto Show. "We have never contemplated it."

GM lost US$10.6 billion last year as it struggled with high labor and commodities costs, loss of market share to foreign rivals and sluggish sales of sport-utility vehicles.

Analysts have said a strike at GM's main parts supplier, bankrupt Delphi Corp., would force the automaker to burn through billions of dollars a week, pushing it near or into bankruptcy.

Delphi has asked the bankruptcy court to void its labor contracts -- a motion, which if approved, would likely prompt a strike at the supplier.

But Lutz, a veteran of Chrysler and Ford who rejoined GM in 2001, said he does not expect a strike at Delphi.

"We just absolutely refuse to believe that there's going to be a strike," he said, adding, "We are going to work our way through it."

GM, which spun off Delphi in 1999, is Delphi's largest customer.

GM shares rose 81 cents, or 4.2 per cent, to US$20.03 on the New York Stock Exchange.

As part of a broad restructuring effort, the world's largest automaker plans to slash 30,000 jobs and close 12 plants through 2008.

Lutz said GM is "on schedule" for the turnaround plan and endorsed the company's embattled chief executive.

"Wagoner is, without question, the right man to lead GM and to continue the turnaround," Lutz said. "GM will come back and blossom like never before and Rick Wagoner will be the celebrated hero at the head of the company," Lutz added.

Wagoner has come under increasing pressure from analysts and investors, who worry about the company's massive losses and a recent disclosure of accounting errors.

Lutz also said GM's US market share is sustainable in the low- to mid-20 per cent range over time. GM's 2005 US market share was 26 per cent.

GM has been steadily losing US market share to foreign rivals that do not share its high labor costs, but Lutz said GM is not focused on increasing market share.

"We would much rather have a great reputation at 25 per cent than try to get 28 per cent or 29 per cent and lose a lot of money doing it," he said.

- REUTERS