Shares of the American multinational, General Motors Company, soared more than 5% in Monday’s trade after the carmaker released its transformation plan for the future.
As a part of the restructuring strategy, the company plans to undertake cost-cutting measures, which include curbing its vehicle line-up in the U.S. and closing U.S. and overseas plants, despite triggering layoff fears.
According to the company, this restructuring strategy is expected to help strengthen its core business, capitalize on the future of personal mobility, and drive significant cost efficiencies.
As per GM’s CEO, Mary Barra, the aforementioned moves are expected to increase GM's free cash flow from autos by $6 billion in the next two years, including cost savings worth $4.5 billion and reduced capital spending worth $1.5 billion by 2020.
With plans to allocate additional resources to electric and autonomous vehicles, the company announced the closure of five plants in 2019 as a part of its $4.5 billion cost-cutting initiative.
The company also announced layoffs of salaried and salaried contract staff to the extent of ~15%, including 25% fewer executives, to reduce overhead costs and to streamline decision-making.