June 27 (Bloomberg) -- General Motors Corp.'s offer of buyout and retirement incentives was accepted by 35,000 workers, allowing it to trim annual spending by $1 billion more than planned and shed the workers two years ahead of schedule.

The departures exceeded Chief Executive Officer Rick Wagoner's expectations and put him closer to his goal of restoring profit by reducing payrolls and closing plants. Delphi Corp., GM's former unit and largest supplier, said separately yesterday that 12,600 of its workers agreed to retire, making it more likely it will exit bankruptcy as a viable company.

GM's union buyouts and retirements are part of plans to close 12 North American facilities by 2008 after $10.6 billion in 2005 losses. The high acceptance rate means Detroit-based GM will cut annual spending by $8 billion by year end, exceeding a goal of $7 billion. It expects the program to cost $3.8 billion, mostly in the second quarter.

``I think you'll see the market is favorable to the news,'' said Jim Hossack, an analyst with AutoPacific Inc., in Tustin, California. ``They got their goal.''

GM saves about $110,000 a year in wages, benefits and pension liabilities for each worker who leaves, JP Morgan analyst Himanshu Patel estimates. The departures, offset by about 5,000 workers who will return from Delphi, mean GM will cut its U.S. union workforce by a net 25 percent and save about $2 billion annually in cash, Patel wrote in a report today.

The agreements on buyouts and retirements also put GM, Delphi and the partsmaker's remaining union workers closer to a labor deal, Wagoner said yesterday. A new contract at Delphi would eliminate the threat of a costly strike that could shut down the automaker's plants

`On the Road Back'

``We're coming very rapidly on the road back,'' Wagoner said yesterday at a news conference in Detroit.

The buyouts and retirements consist of 33,800 United Auto Workers members and about 1,200 workers represented by the International Union of Electrical Workers-Communications Workers of America who accepted an earlier offer, GM said yesterday.

Shares of GM rose as much as 2.2 percent today before declining after sales chief Mark LaNeve said June U.S. sales will be ``brutal'' compared with year-earlier results. The stock dropped the most in eight months, declining $1.85, or 6.7 percent, to $25.90 at 4:02 p.m. in New York Stock Exchange composite trading. The shares have gained 33 percent this year on optimism about Wagoner's restructuring plan.

GM's June and July sales results won't match last summer's increases, when all customers received the same discounts that GM employees get, LaNeve said. U.S. sales for GM have declined 8 percent this year through May.

Market Share

GM, the world's largest automaker, is scaling back in North America after Asian rivals such as Toyota Motor Corp. captured a record share of the U.S. market and sent GM's share to an 80-year low. Wagoner's plans to shut plants will trim regional production by about 1 million units a year.

Of the workers who agreed to leave GM, 4,600 took buyouts and 30,400 took some form of retirement, accepting packages ranging from $35,000 to $140,000. GM is trying to speed workers' departures so it can trim its payroll and save money. Workers who took buyouts also reduced GM's future liabilities by giving up their right to pensions and health care in retirement.

Workers who accepted the offer by last week's deadline have until June 30 to change their minds, so the final numbers may change slightly. Most of those who accepted will leave by 2007.

``We are extremely encouraged by the take-rate, as this labor cost savings bodes well for the company's turnaround efforts,'' said Joe Amaturo, an analyst with Calyon Securities Inc., in a note today.

$40 Target

KeyBanc analyst Brett Hoselton, who has a ``buy'' rating on GM shares, raised his 2006 per-share earnings estimate to $3.65 from $2.53, and his price target for the shares to $40 from $35.

GM's 8.375 percent note due in 2033 was unchanged at 75 cents on the dollar, yielding 11.4 percent, according to Trace, the bond-price reporting service of the NASD. The debt traded near 66.5 cents on the dollar at the end of 2005.

GM can hire temporary workers should the buyouts and retirements create a shortage. The temporary employees, who will be union members, are paid $18 to $19 an hour, GM spokesman Tom Wickham said. GM's union assembly wages are about $27 an hour.

Wagoner didn't have an estimate for how many temporary workers might be needed.

Earnings Boost

GM will gain about $1.25 a share in annual earnings for every 10,000 workers who took the offers, Merrill Lynch & Co. analyst John Murphy wrote June 16. The New York-based analyst, who rates the automaker a ``buy,'' estimated 30,000 would leave. GM's per-share loss was $9.55 last year.

GM offered buyouts of $35,000 to employees still working after reaching the 30 years' service needed to retire. Those within three years of retirement eligibility would get a pension of slightly less than the standard $36,000. They'd get a full pension on the 30th anniversary of their service date.

Employees who have at least 10 years at GM and aren't eligible for early retirement were offered $140,000 buyouts. Workers with fewer than 10 years of service can get $70,000. Those who accept the offers give up health coverage and stop accumulating benefits against GM's $170 billion pension and retiree health-care obligation.

Under current GM contracts, the company must keep paying workers even if it doesn't have work for them to perform.

Delphi plans to say in July how many of its 33,000 U.S. union workers accepted similar buyout offers. The Troy, Michigan- based company filed for bankruptcy protection for its U.S. operations in October.

GM, Delphi and the UAW are trying to avert a strike at Delphi, whose unions have threatened to walk out if CEO Steve Miller gets bankruptcy court approval to scrap their contracts. He wants to cut hourly pay to as low as $12.50 from about $27.

To contact the reporters on this story: Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net; Greg Bensinger in New York at gbensinger1@bloomberg.net

Last Updated: June 27, 2006 16:15 EDT