"GM lost $1.1 billion the first quarter mainly on its chief business, North American automotive operations. Its share of the U.S. new vehicle market has slipped to just 25.6% this year, from 27.3% a year ago. Sales are off 4.9%, despite GM's industry-leading incentives, averaging $3,910 per vehicle, according to industry tracker Autodata. GM's declines are against a backdrop of a new vehicle market up 1.2%, according to Autodata."
Above from an investment article about GM. In the short run, GM can still pay the dividend from cash reserves even if they are losing money on their "normal" operations, that is, building and selling vehicles. In the longer term, tho, GM operations have to return to profitibility or the dividend has to be cut (that's already being discussed by GM board).
The point of this is that Barrie's comment above that: "I doubt they are selling any cars at a loss as why are the shareholders getting $2.00 a share profit. Remember the more you build the cheaper they become to produce. They are greatly reduced in price but not at a loss." is not correct. GM is, in fact, operating at a loss and still paying the dividend. The issue is that situation CANNOT continue. Cutting the dividend would be a serious blow to GMs share price and investor confidence; but may have to be done to both conserve cash and help convince the unions they are serious about getting a benefit/pension break from them.
Not a nice position for GM to be in today. See also today's Globe&Mail article on Toyota.
