GM Talks Up Cost Cuts

The firm said Jerome York, its adviser, presented a plan for GM at the Society of Automotive Analysts that included cutting the dividend by 50% and a "substantial" reduction in payments and salaries for the company's top executives.

Kerkorian bought a 9.9% stake in GM in May through a $31-a-share tender offer, but that investment took a big hit by the time 2005 came to a close, as the carmaker's stock lost almost 50% of its value last year.

Additionally, GM forecast a record year for global auto industry sales in 2006, driven by growth in the Asia-Pacific region. GM sold 9.17 million cars and trucks around the world last year, up 2% from 8.99 million in 2004, the second time in its history it surpassed the 9 million mark. Also, the company said its U.S. hourly and salaried pension plans were overfunded by about $6 billion at the end of 2005.

GMAC, the carmaker's financing division, should post solid results in both 2005 and 2006, GM said. GMAC had around $20 billion in cash at the end of 2005. GM added that it's continuing to explore the possible sale of a controlling interest in GMAC.

Separately, GMAC said in a regulatory filing that it will record a noncash charge of about $450 million, mainly for the impairment of goodwill at its commercial finance division. GMAC expects its net income for 2005 to be relatively consistent with its targets, in the $2.5 billion range, including the impairment charges, but ahead of the forecast if the costs were excluded.