General Motors Corp.'s (GM) path to recovery is fraught with uncertainty and potential pitfalls that could force more painful restructuring in the years to come, Chief Operating Officer Fritz Henderson said on Tuesday.

The industry already appears off to a tough start in 2009. Henderson said January auto sales are shaping up no better than last month, when GM's sales fell 31%.

The U.S. housing market that began the auto industry's downward spiral will likely continue to get worse before it improves, Henderson said. Meantime, cheap oil prices may stick around even as federal regulations force auto makers to bring more fuel-efficient vehicles to market, impairing the companies' ability to sell smaller vehicles they're required to build.

"The situation can always get worse," Henderson said, speaking at the Automotive News World Congress in Detroit. "We need to accept responsibility for radical actions to address events that are outside our control."

Despite the foreboding tone, Henderson reiterated his confidence that GM's recovery plan, presented to the U.S. government as a condition of winning up to $13.4 billion in federal loans. He said GM's decision to ask for money to avoid a bankruptcy was a "sad day" for the company.

"The happiest day of my career will be the day we repay the loan," he said.

GM is awaiting a second installment of the loans approved in December. The auto maker was expecting a $5.4 billion infusion on Jan. 16.

Henderson said the auto maker is working with U.S. Treasury to process the loans and expects to receive the cash soon, which the auto company requires to fund its operations.

"What happens if we don't get the draw? We run out of money," he said.

Henderson said oil prices will remain depressed in the near term but will return to $130 to $160 a barrel in the next five years. GM and other auto makers will be challenged to sell fuel-efficient small cars and vehicles powered by alternative technologies while gas prices remain low, he said.

Henderson described a meltdown of global auto markets today in last year's fourth quarter that took GM by surprise.

Rising unemployment and a credit crunch in the U.S. combined with an economic slump that spread around, slamming the auto maker on all fronts, he said.

"We didn't necessarily see this freight train coming," Henderson said. "2008 almost killed us."

Henderson said GM is still in preliminary talks with bond holders over reducing its debt load and with the United Auto Workers over labor cost reductions, both of which are key requirements of the federal loans. More substantial talks will begin after GM updates the restructuring plan it presented in December.

The depth of GM's troubles at the end of the year will be clearer when GM releases its fourth-quarter financial results, expected within the next few weeks.

Henderson declined to weigh in on the announcement of a deal between Chrysler and Fiat S.p.A. (F.MI) to establish a global alliance.

"I am confident they will negotiate something that is quite creative and quite clever," he said.

-By Sharon Terlep, Dow Jones Newswires; 248-204-5532; sharon.terlep@dowjones.com

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