Weak North American sales, falling production volumes and rising raw material costs are increasing our concerns for the General Motors ( GM ) stock. Significant incentives to stimulate sales and keep inventories lean are eating into margins. Furthermore, GM sales are hampered by poor resale values. The company is at a disadvantage compared to its competition owing to huge pension and health care costs. These issues compel us to rate the shares a Sell with a six-month target price of $7. GM is undertaking operating actions to improve cash flow by approximately $10 billion through the end of 2009. These include headcount reductions, structural cost reductions of approximately $2.5 billion in GMNA by capacity reductions, downward revisions of capital spending plan from $8.5 billion to $7 billion in 2009, and suspension of future dividends on stock (which is expected to improve liquidity by approximately $800 million). The company announced to trim 15% of its North American work force by November 2008 and has planned a reduction in salaried employment costs in the US and Canada by 20% or $1.5 billion in 2009. It has started offering early retirement packages to these workers. The company estimates an expense of over $900 million over the next few years to adjust its manufacturing capacity, including plant closures and output reduction. It plans to spend $100 million in 2008, $200 million in 2009, and $600 million after 2009. Read the full analyst report on GM "GM" Free Stock Analysis: Buy? Sell? Hold? Zacks Investment Research