More than 60% of GM’s volume (and a little more than 40% of its revenue) now comes from outside the US. There, the old saying ‘What’s good for General Motors is good for America’ has been turned on its head. America’s woes, from sub-prime mortgages to the credit crunch and the rapidly-rising cost of living and of fuel, have been transmitted directly to its domestic car makers.

Demand for large pick-up trucks and sport-utility vehicles – for years the most popular models in the US – is down by one-third this year. GM, like Ford and Chrysler, does not have a good selection of small economy cars to sell instead and is looking to its subsidiaries in Europe, Japan and Korea to provide them. Now that the Honda Civic is the best-selling car in America, they can’t come soon enough.

The Insignia may seem a substantial business and family saloon in Europe but in the US it qualifies as a ‘compact’ sedan. It will be sold in America by GM’s Saturn brand. A related model, the Chevrolet Malibu, is one of the few bright spots in its current market performance.

The Malibu and the new Cadillac CTS have managed to replicate Europe’s success with its last two models, the Corsa and Astra: they are selling richer specifications. Malibu transaction prices – what the customer actually pays - are $4,000 higher than before and the CTS is $8,000 above its predecessor. Henderson identified this as an important area for improvement. He said ‘We are at a real disadvantage in average transaction prices compared with our foreign competitors. We can’t afford any more to have brands that just create volume. They must all be profitable.’

Announcing the new plan, described as ‘aligning business with current market conditions’, General Motors chairman and chief executive Rick Wagoner made one of the great under-statements: ‘It is fair to say that the deterioration of the US market presents new challenges’.

Wagoner has had to face a lot of new challenges in the past five years. First it was healthcare and pensions costs for GM’s employees and retirees. Then there were the troubles at Delphi, the component business that GM had spun off. And underlining all this was a steady decline in market share and profit because it made too many of the wrong types of cars and didn’t build them very well anyway.

One by one, these issues have been, or are being, resolved but the result is that GM is already a much smaller business. Last year, by including the output of its Chinese affiliate Wuling, GM managed to stay as the world’s number 1 car maker, ahead of Toyota. But in financial terms, GM is now an also-ran in a race that Toyota leads by a country mile.

With the latest setback in domestic sales added to rising commodity prices, GM’s shares declined to a 50-year low. The latest revival plan calls for a $10 billion in cost savings on operations and another $5 billion from the sale of assets. The cost savings are right across the board. The bosses won’t get salary increases or bonuses, shareholders won’t be paid a dividend. Component suppliers will be squeezed, and there will be a further reduction in truck production.

For the first time in many years, GM has cut back its planned research and development budget but it maintains that there will be no ill effects for future programmes like the Volt electric car (on the market in 2010), fuel cell research, and its investments in ethanol production.

There has been speculation that it will reduce the number of brands in North America but the top management is not showing any inclination to drop Buick or Pontiac, its weakest sellers. It knows from cutting Oldsmobile a few years ago that closing a brand with hundreds of privately-owned dealers is a slow and expensive business. There is the added complication of Buick having been positioned as prestige brand in China; to drop it in the domestic market would be to lose face.

It does admit that it wants to sell Hummer. Officially, the brand that has the biggest and baddest off-roaders is the subject of ‘strategic analysis’ but Ray Young, chief financial officer, says that they have already received several expressions of interest in taking it over. Hummer is thought to be worth somewhat less than $2 billion.

Who the potential buyers are is not clear. Recession, high oil prices and environmental do-gooders make this a difficult time for the makers of SUVs and the car companies that don’t have large 4X4s count themselves lucky. Surely, none of those will venture where GM fears to tread?

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