Cash-strapped General Motors Corp. said Monday it will delay reimbursing its dealers for rebates and other sales incentives, an indication that the company is starting to have cash-flow problems.
Company spokesman John McDonald said payments due Nov. 28 will be delayed for two weeks until Dec. 11, while those due Dec. 4 will be paid Dec. 18. The normal weekly schedule will resume after that. He would not say how much money the company will save from the delays.
GM said Nov. 7 that its cash situation was so dire that it may reach the minimum required to run the company by the end of the year. Executives from GM and its Detroit-area counterparts are scheduled to appear at congressional hearings this week to seek $25 billion in loans from the federal government.
Van Conway, a mergers and acquisitions expert and partner with Birmingham, Mich.-based Conway & MacKenzie, said the delay is a sign that the company knows it will run low on cash, and dealers may be most able to take the hit without hurting the company.
McDonald would not say whether GM was having a short-term liquidity problem during the period that the payments have been delayed.