General Motor's Plan to Sell Assets To Raise Cash May Be Easier Said Than Done

Implications: In July, GM outlined a plan for cutting expenses and selling assets in an effort to raise cash which it is burning through rapidly.

Analysis: General Motors' plan to sell assets to raise much-needed cash may be easier said than done.

In July, GM outlined a plan for cutting expenses and selling assets in an effort to conserve and raise cash, which it is burning through so quickly that one investment firm said Wednesday the automaker needed $7.3 billion in fresh capital to pay its bills through 2009.

But on Tuesday Navistar International backed out of a deal to buy GM's medium-duty-truck unit. And, while GM says it has received much interest in Hummer Division, a number of expected suitors have said no thank you in a variety of languages.

Terms of the proposed purchase were never disclosed so its not known how much GM would have raised from the sale. Some analysts had placed its value at $500 million. Meantime, GM said it would review strategic options for the business, including continued discussions with Navistar.

Also under strategic review for possible sale or restructuring is Hummer, which has seen sales plummet more than 40 percent this year. But of late, a number of parties that were expected or even rumored to interested in Hummer have said no they aren't. Among them are India's Mahrindra & Mahrindra, India's Tata Motors, Russian billionaire Oleg Deripanska and some Chinese automakers.

GM claims not to be concerned, but the need to raise more cash is growing. According to one report GM needs $7.3 billion in fresh capital to pay its bills through 2009. GM could burn through $6.9 billion in the second half of 2008 and another $4.4 billion next year. That amount could increase if the U.S. slowdown spills over to the rest of the world.