GM expects strong year despite ‘challenging’ environment

GENERAL Motors Co’s chief financial officer said yesterday the car maker expected another very strong year and reiterated the earnings forecast for the year.

“Overall, we expect a more challenging environment across a number of dimensions,” due to rising interest rates and falling used-car prices, Chuck Stevens told investors and analysts on a conference call.

But thanks to an improving economy and lower fuel prices, Stevens said, GM believed “we’re going to be in a reasonably constructive industry environment”.

He said the No 1 US car manufacturer would reduce inventory levels, a concern for Wall Street, to around 90 days in June from 98 at the end of March, and to around 70 days by the end of the year.

A combination of solid economic indicators and cost-cutting should help GM maintain profit margins of around 10%, he said.

His conference call came just days after disappointing US new light-vehicle sales figures for March showed an annualised sales rate of around 16.6 million units.

Those figures added to fears that, after a six-year boom, US vehicle sales might be set for a decline. Stevens said GM still expected US new light-vehicle sales for the industry to be around 17.5 million units, after a record 17.55 million last year.

GM believes March figures were skewed by a mild winter.

It expects full-year earnings per share of $6 to $6.50.