Finance and Economic

General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) will be able to invest more to develop cars and crossover vehicles even after $10 billion in cost cuts under a rushed restructuring that the U.S. automaker sees as the last of its kind, the company’s president said on Tuesday.

“In an uncertain market we need to be in as much in control of our own fate as possible,” GM President and Chief Operating Officer Fritz Henderson told Reuters.

Henderson, GM’s No. 2 executive, was charged by Chief Executive Rick Wagoner in June with pulling together a plan to address deepening concerns about the automaker’s ability to outlast a downturn in U.S. auto sales analysts saw as testing its $24 billion in cash reserves.

Facing high gas prices and a rush away from trucks and SUVs, GM surprised Wall Street with a plan that relies more heavily on cost-cutting than new borrowing or asset sales.

In fact, the central element of GM’s plan to shore up liquidity by $15 billion through 2009 is cutting $10 billion in additional costs payday loans. That will come through the elimination of thousands of white-collar jobs, including engineers, and a $1.5 billion cut in capital spending.

Most of the cuts stem from GM’s decision to suspend development of a new-generation of full-size trucks — a line of once highly profitable vehicles including the Chevrolet Silverado and GMC Yukon.

Although analysts credited GM with addressing the threat that it could run short on cash, some questioned whether the cost-cutting could hamstring its ability to compete in the market for more fuel efficient small cars.

“In the medium term, the primary risk for GM will be that the cash-economizing measures implemented as part of this program will compromise product offerings for years to come,” said Calyon Securities analyst Mark Warnsman. 

Read more