General Motors is closing in on its cost-cutting goal

About 5,000 workers at automaker General Motors (GM) have accepted a buyout program proposed by the company to leave their jobs, allowing the auto giant to move closer to its $2 billion cost-cutting target, the firm’s chief financial officer said.

GM shares were traded at a price lower by 2.1 percent. However, CFO Paul Jacobson stated that the demand for trucks and jeeps remains strong in the US, writes Reuters.

General Motors has raised prices in the U.S. for the past two years as supply chain bottlenecks have affected production. However, Jacobson stated there is no possibility of further price increases, which is why reducing costs as soon as possible is important.

The automaker has set a goal of cutting costs by $2 billion by the end of 2024, with 30 and 50 percent of those cuts expected to occur this year. Moreover, the response to the buyback program indicates that by the end of 2023, GM will be in a better position on that issue, Jacobson said at the Bank of America conference.

Figures provided for the company

In a press release for employees, the company’s CEO, Mary Barra, stated that the layoffs of several hundred workers in February and 5,000 buyouts “secured about one billion dollars” of the planned two billion dollars in reductions to the company.

Jacobson said GM would take a $1 billion charge in the first quarter. The company expected $1.5 billion in costs related to layoffs.

Jacobson said GM now allocates 75 percent of its annual capital to electric vehicle projects, which will be less profitable in the short term than the automaker’s internal combustion vehicles.