General Motors hit by mass strike

If the United Auto Workers strike against General Motors in the US lasts longer than a week or two, it could cost the carmaker billions of dollars, according to several industry analysts.

A strike of two weeks or less would not hurt GM's cash position and would actually improve its inventory situation, Lehman Brothers analyst Brian Johnson said in a note to investors yesterday.

But a longer strike would be harmful, causing GM to lose $8.1bn (€5.75bn) in the first month and 7.2bn (€5.1bn) in the second month, assuming the company can't produce vehicles in Mexico or Canada, Johnson wrote.

Initially, the strike would not have much impact on consumers because GM has so much inventory, the analysts say.

The Detroit company had around 950,000 vehicles in stock at the end of August, about 35,000 less than at the same time last year.

But Tom Libby, senior director of industry analysis for JD Power and Associates, said even a short strike could hurt GM because its new crossover vehicles - the Buick Enclave, GMC Acadia and Saturn Outlook - are selling well and in short supply.

"The momentum they've established for those products would be interrupted if there's a supply interruption," Libby said.