General Motors (NYSE:GM) sang a new tune when it announced earnings Monday. Though GM struck a few positive notes by unveiling a tentative agreement with the United Auto Workers (UAW) and a potential sale of a controlling interest in its finance unit, GMAC, the company's main melody has been wearing thin.

Sales rose, but a $1.92 loss in adjusted earnings per share came in below analyst estimates. With restructuring and other charges added in, that figure inflates to $2.89 a share -- a $1.1 billion loss compared with net income of $315 million in the year-ago period. Year-over-year losses in worldwide automobile operations ballooned from $219 million to $1.6 billion (which excludes any restructuring costs).

But the company's got a whole new song and dance going forward, rewriting the tired old refrain about employee benefit costs killing earnings. GM and the UAW have produced a tentative agreement that must be approved by the union's workers. The deal could cut annual employee health care costs by $3 billion before taxes and cut retiree health care liabilities by approximately $15 billion.

Before you rush out to buy GM stock, put its pension and benefit costs into perspective. A study before today's proposed cuts estimated that pension and other retiree benefits add $1,360 to the cost of every GM vehicle produced, compared with $734 at Ford (NYSE:F), $631 at Chrysler (NYSE:DCX), $107 at Honda (NYSE:HMC), and $190 at Toyota (NYSE:TM). Foolish investors may wonder whether cutting those costs will help GM become more competitive and sell more cars, especially since sales seem to be driven primarily by generous financing, cash back, and other discounts.

When David Meier and I dueled over GM in April, he sang the praises of GMAC's potential value, which he felt the stock market had overlooked. David will likely be pleased to learn that GM has decided to investigate the sale of a controlling stake in GMAC.

Despite Hurricane Katrina and the increase in borrowing costs caused by GM's woes, GMAC posted $675 million in third-quarter profits. That's up $55 million from the year-ago quarter. GM is rightly thinking that letting others control GMAC will allow the lender to regain its investment-grade debt rating, letting it borrow at more advantageous rates. That might not be such a bad idea, if it works, but I'm not sure how GM's own interest coverage will fare without GMAC's positive influence on its bottom line. A review of 2003 and 2004 data seems to indicate that a GMAC spinoff will reduce GM's overall debt burden, which could help GM's ratings.

Don't call your broker just yet. GM's third-quarter North American market share fell from 28.5% to 25.6% year over year. The company also announced plans to cut as much as 8% of its workforce over the next three years, ostensibly to reduce costs -- an admission that the company ought to match its labor supply to its product demand.

On the surface, there seems to be good reason for the more than 10% rise in GM stock during Monday trading. Brokering a deal with the UAW without waiting for new contract negotiations could eliminate some of the uncertainty that has plagued GM shares. Still, without a GMAC deal to evaluate, and with new car sales in North America still sagging, I'm skeptical.

Remember that GM might be forced to shoulder up to $12 billion of dearly departed Delphi's enormous pension liability. GM estimates its liabilities at somewhere around $6 billion, which could offset a material percentage of its proposed cost savings. With that arrangement, GM's new tune seems altogether sour.

General Foolishness on General Motors:

Fool contributor W.D. Crotty does not own shares in any of the companies mentioned, although W.D.'s garage is filled with GM products. Click here to see The Motley Fool's disclosure policy.