GM Sees U.S. Avoiding Recession CFO Henderson Says (Update3)
GM Sees U.S. Avoiding Recession, CFO Henderson Says (Update3)
By Jeff Green
Jan. 29 (Bloomberg) — General Motors Corp.;s finance chief
said further interest rate cuts and an economic stimulus plan
will keep the U.S. out of recession, though the automaker sees
more “risk;; than “upside;; over the next year to 18 months.
U.S. auto sales may decline slightly from 2007 and growth
opportunities remain outside the home market, Chief Financial
Officer Fritz Henderson told reporters today. Global auto sales
will probably rise to 73 million from 71 million, even if U.S.
and other markets shrink, Henderson said.
“The fragility of the market suggests another step;; by
the Federal Reserve, Henderson said. The U.S. central bank
announced a surprise interest-rate cut last week and economists
say another could come tomorrow. Some action to “add
liquidity;; to the market is “very much needed,;; he said.
Such a cut, a proposed tax rebate and remaining healthy
areas of the economy should keep the U.S. out of recession,
Henderson said at an Automotive Press Association lunch in
Detroit.
The government actions are a recognition of the
“tremendous volatility;; in U.S. stock, bond and credit-default
swap pricing, Henderson said. The credit market remains “locked
down;; for all except the best risks, he said.
Sales Outside U.S.
GM, the world;s largest automaker, is focusing on sales
outside the U.S., which made up 59 percent of car and truck
volume last year, as part of the Detroit-based company;s
strategy to return to profit after posting $12.4 billion in
losses in 2005 and 2006. The company is also turning attention
to new technology, such as electric cars, and alternative fuels,
Henderson said today.
GM gained 68 cents to $27.21 at 4 p.m. in New York Stock
Exchange composite trading. The shares have fallen 17 percent in
the past year.
The Detroit-based automaker will use its own global
portfolio of products and partnerships with other companies to
help develop future products, which are being driven by new
regulations designed to cut energy use and curb global warming,
Henderson said.
The company also is trying to cut labor costs and create
stable profits in the U.S. and other mature markets and
emphasize increased profits in developing countries such as
India, China and Russia, he said.
GM has cut $9 billion from its annual costs since 2005 in
the U.S. and may trim that by an additional $5 billion by 2011
through its 2007 contract with the United Auto Workers union.
GM lost $38 billion in the first nine months of last year,
mostly on a $39 billion expense related to a tax accounting
change in the third quarter. GM reports full year results Feb.
12.
The automaker may have lost 86 cents a share last year,
excluding the tax charge, the average of a dozen analyst
estimates compiled by Bloomberg.
To contact the reporter on this story:
Jeff Green in Detroit at
