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GM's four-year contract with the UAW was to expire at midnight Friday. The union extended it on an hour-by-hour basis as the two sides talked through the weekend, including a 16-hour bargaining session Sunday. Ford and Chrysler extended their contracts indefinitely.

Local union leaders have said the main outstanding issues in the talks are retiree health care expenses and whether GM will promise to build new vehicles at UAW-represented factories. GM wants the union to take over responsibility for retiree health care costs using a company-funded trust. The UAW was asking for job guarantees in exchange for taking on the costs.

GM, Ford and Chrysler have a combined unfunded retiree health care obligation of more than US$90 billion. GM's unfunded obligation alone is $51 billion. The companies want to get those obligations off their books in order to improve their financial outlook and boost stock prices and credit ratings. They also want to free themselves of the risk of inflation in health costs.

Peter Nesvold of Bear Stearns said Monday that a health care deal will help GM, but Ford may be better positioned to take advantage of the settlement. Ford has $40 billion in cash on hand to fund the trust, while it's unclear whether GM has sufficient liquidity to fund the trust. GM has already sold major assets such as a stake in its GMAC finance unit, Nesvold said, while Ford is still expecting to get more cash from the sale of its Jaguar and Land Rover units later this year.

GM's product cycle also is peaking right now with the introduction of the redesigned Chevrolet Malibu, while Ford's product cycle is in a lull but will be improving in 2008, Nesvold said in a note to investors.

Morgan Stanley analyst Jonathan Steinmetz agreed that while the establishment of a health care trust would be a watershed event, it's not a panacea for GM, which still faces a soft U.S. auto market and the possibility of continuing U.S. market share losses.

``With the health care issue on the sidelines, we believe investors need to focus a lot more attention now on international growth and additional cost-cutting opportunities,'' Steinmetz wrote in a note to investors.