UPDATE 2-GM says developing plans to cut costs, save cash

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By Kevin Krolicki

DETROIT, July 8 (Reuters) - General Motors Corp (GM.N) is working quickly to develop plans to cut costs and improve its cash position in the face of a slumping U.S. market, Chief Executive Rick Wagoner said in an e-mail to the automaker's managers.

The letter marked the first confirmation that GM was working toward the kind of program of additional restructuring and capital-raising that Wall Street analysts have said the embattled automaker urgently needs.

"The rapid rise in fuel prices and change in auto industry sales mix have made market and economic conditions very challenging," Wagoner said in the e-mail. "We're responding quickly and aggressively."

GM shares touched a 54-year low last week, and analysts have said the automaker needs to raise between $5 billion and $15 billion in order ride out a sharp downturn in U.S. sales.

Wagoner said GM's North American management team was working out new plans to cut costs and shore up its liquidity.

"Our ... team continues to develop further action plans to optimize our operating structure under these new market conditions, improve our cash and funding position, and keep our key product and technology investments on track," he said.

GM shares traded up 16 cents or 1.6 percent to $10.40 in morning dealings. The stock has fallen 55 percent since early May, when evidence began to build of a further slowdown in U.S. auto sales that has hit pickup trucks and SUVs hardest.