Deloitte casts 'doubt' on GM

Deloitte stated that there was 'substantial doubt' about General Motors' (GM) ability to continue as a going concern in GM’s 10-K SEC filing on 4 March concerning group’s annual results for 2008. However, Deloitte gave an unqualified audit opinion.

GM has asked for more than $16.6bn (£11.8bn) from the US government. GM, which reported a $31bn loss for 2008, is also seeking €3.3bn (£2.9bn) from European governments.

'The administration is very mindful of the challenges in the auto sector,' a US Treasury spokesman told the Daily Telegraph. 'Our team is working around the clock to develop the most thoughtful approach possible to the situation.'

Deloitte said that ongoing losses, stockholder deficits, and the struggle to generate cash flow mean GM’s future is under serious threat. Despite this, the group’s annual report and accounts published last month stated that creditors had decided not to force the company to repay more than $6bn in loans, in order to let GM press the case for more government financial aid.

GM also reiterated that it faces Chapter 11 bankruptcy and liquidation if wide-ranging restructuring plans – which would see 47,000 job cuts – do not receive financial backing. It is rumoured that GM, which owns the Vauxhall brand, wants between £500m and £750m from the UK Government in return for a stake in the company. GM Europe is expected to present its British proposals next week.

There was a 21.9% fall in new car registrations in February compared with the same month last year, according to figures released by the Society of Motor Manufacturers and Traders on 5 March. New registrations for January and February are down 28.2% on the same period in 2008.