It begins: GM draws down on credit
GM, having no desire to be short of cash, announced today that it would take $16 billion in revolving credit and turn it into cash to stay flexible. The company expects to have over $15 billion at the end of March, even before the draw-down.
GM is currently not producing vehicles in North America; it has been stung with low sales in China after coronavirus measures there reduced demand for cars.
GM Financial is already doing well; it finished 2019 with $24 billion of liquidity, and can support six months of cash needs, while writing new loans, without having to go to capital markets. This will be needed, as many banks (including the former General Motors Acceptance Corporation, now dubbed Ally Bank) are allowing borrowers to skip payments.
Not surprisingly, GM told analysts that their prior guidance for the quarter and the year will not be valid.
Clark Westfield grew up fixing up and driving past-their-prime American cars, including various GM and Mopar V8s. He has ghostwritten auto news for the last few years, lives in Farmingdale, New York, and can be reached at +1.516-531-4021.