General Motors revealed today that it would offer early retirement to 74,000 of its 110,000 US workers as it delivered a net loss of $38.7 billion (£19.8 billion) for last year.

If each offer is taken up, GM faces paying out $4.6 billion.

Each skilled worker will be offered up to $62,500.

It is not clear how many workers are expected to take up the offer, although under the deal GM can replace up to 16,000 non-assembly line workers with new employees who will be paid half the old wage of $28 an hour.

Fritz Henderson, the chief financial officer of GM, said that the manufacturer expected to start seeing some savings from this in the second half of 2008.

Last year's $38.7 billion loss — $722 million in the fourth quarter — compares with a $2.2 billion profit in 2006.

GM announced a one-off non-cash charge of $38.3 billion in the third quarter relating to the valuation of deferred tax assets.

"It was a tough [fourth] quarter in North America,'' Mr Henderson told reporters. "Volumes were down, and there was tougher pricing because we had a full incentive load for our pick-ups."

GM said that it expected to start delivering an improvement in the performance of automotive operations this year.

However, the greatest improvement is likely to be in 2010 and 2011, when a recovery in the US car market is expected and the full benefits of its labour agreements with the United Auto Workers flow through.

The company said that it was pleased with its performance given the challenging climate in key markets, such as the US and Germany.

Last week the financial services group GMAC, which is 49 per cent owned by GM, revealed a $724 million loss in the fourth quarter of 2007.

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