July 15 (Bloomberg) -- General Motors Corp., buffeted by a U.S. sales collapse and three years of losses, suspended its stock dividend, cut salaried worker costs by 20 percent and proposed selling assets to raise at least $15 billion in the next 18 months.

GM said the reductions in salaried jobs and eliminating the 25-cent quarterly dividend will help shrink annual operating expenses by $10 billion. The company also plans to raise $4 billion to $7 billion through asset sales and new bank loans.

``At first blush, these would be positive steps for liquidity, but we would view them as absolute necessities given the current market conditions,'' said Gregg Lemos Stein, a credit analyst at Standard & Poor's in New York.

The moves may help Chief Executive Officer Rick Wagoner, 55, counter claims that the weakest U.S. auto demand in more than a decade puts GM at risk of bankruptcy. Merrill Lynch & Co. said July 2 that GM may need to raise $15 billion and a Chapter 11 filing is ``not impossible'' should sales continue to deteriorate. GM last eliminated its dividend in 1922.

The increased cash means the automaker will have enough to operate should the U.S. market fall to 14 million cars and trucks this year and next, lower than analysts expect, Wagoner said today in a broadcast to employees. GM also figures on oil costing $130 to $150 a barrel, compared with $146 currently.

``Overall, we believe that the cost cutting is ahead of market expectations -- and relatively credible, while the fundraising provides less up front cash than we and the market had been looking for,'' Lehman Brothers Analyst Brian Johnson wrote in a report today.

GM fell 35 cents, or 3.7 percent, to $9.03 at 10:38 a.m. in New York Stock Exchange composite trading.

Clouded Crystal Ball

``Since the first of this year, our progress has been threatened as U.S. economic conditions that have become increasingly more difficult,'' Wagoner said on a conference call. ``We are having a tough time getting clarity in our crystal ball.''

The automaker said it will have a ``significant'' second- quarter loss because of declining market conditions and a strike at American Axle & Manufacturing Holdings Inc. and two of its own factories.

GM is trying to raise $2 billion to $4 billion in additional liquidity with asset sales and $2 billion and $3 billion of new financing secured by assets such as foreign subsidiaries, brands and its stake in the GMAC LLC finance unit.

The Detroit-based automaker will reduce capital spending by $1.5 billion to about $7 billion next year, and will boost working capital by about $2 billion in North America and Europe by paring raw-material use and its inventory of unused parts. GM won't reduce capital spending in China, Wagoner said.

Health Care

The company also will cut health care for U.S. salaried employees older than 65 as of Jan. 1, 2009, with offsetting increases to pensions. Cash bonuses for executives will be eliminated. The reductions in benefits and salaried headcount will save about $1.5 billion in 2009, GM said.

The automaker will also delay $1.7 billion in payments to its union retiree health-care fund, Wagoner said.

GM, turning 100 this year, reported its largest annual loss in 2007, $38.7 billion, after a tax accounting change, and hasn't posted a profit since 2004. The carmaker's U.S. market share hovers at the lowest level since 1925, and its stock is trading at 54-year lows.

Wagoner's Tenure

Since Wagoner became CEO in June 2000, GM has cut its U.S. salaried workforce to 32,000 from 44,000. GM shares through yesterday have lost 87 percent during Wagoner's tenure, and the stock is the worst-performing member of the 30-company Dow Jones Industrial Average over the past 12 months.

On June 3, Wagoner said GM would close four truck factories by 2010 to eliminate 700,000 units of North American production capacity while boosting output of fuel-efficient small cars. Some of those truck-plant reductions will be accelerated, he said today, without giving details.

Prior to today, Wagoner had already identified structural cost cuts of $15 billion from the end of 2005 through 2010.

He said last week that GM isn't considering bankruptcy and doesn't plan to eliminate vehicle brands beyond a possible sale or shutdown of the Hummer line of sport-utility vehicles.

GM's 16 percent U.S. sales decline through June has exceeded the industry's 10 percent fall. Sales of pickups, SUVs and vans - - the vehicles most affected by record gasoline prices -- are down 21 percent in the period. The company relies on light trucks for about 60 percent of its U.S. volume.

Small-Car Prospects

GM said it will bring five new products to the U.S. by the third quarter of 2010. The automaker is adding a Chevrolet small car, the Buick Invicta sedan and a sports wagon and coupe version of the Cadillac CTS sedan. The company will also begin producing a 4-cylinder version of its Chevrolet Equinox SUV in May 2009.

``GM is certainly going to be looking to bring a higher number of fuel-efficient vehicles to the U.S.,'' said Efraim Levy, an equity analyst at Standard & Poor's in New York. ``They have some good small-car products in South Korea and in South America that they could bring here sooner.''

At the current pace, U.S. auto sales may plunge to 14.5 million units for 2008, the lowest in 15 years, according to Deutsche Bank AG. The industry average this decade through last year was 16.8 million.

GM has said it is delaying plans to design future large pickups and SUVs and is studying whether to bring a car to its home market that is smaller than any currently sold. GM reiterated that 18 of its next 19 product debuts will be cars or car-based SUVs.

Focus on Fuel

Besides the minicar, GM is weighing a list of options for refocusing its auto lineup on fuel efficiency rather than performance, people familiar with those plans said this month.

GM's 8.375 percent note due July 2033 fell 1.25 cent to 54 cents on the dollar, yielding 15.82 percent, according to Trace, the bond-price reporting service of the Financial Industry Regulatory Authority.

S&P has a B rating on GM debt, five steps below investment grade, with a ``negative'' outlook.

Credit-default swaps on GM debt lost 115 basis points to 2,093 basis points, according to CMA Datavision in New York. The contracts are designed to protect bondholders against default. A decline in the price indicates a rise in the perception of a company's credit quality.

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

Last Updated: July 15, 2008 10:44 EDT