GM: NOT SO FAST, TOYOTA: A global sales surge keeps us ahead, Wagoner reports
Source: Detroit Free Press
www.freep.com
Written by Tom Walsh
January 7, 2005
They may want to hold off on the party hats at Toyota Motor Corp.
General Motors Corp. Chairman Rick Wagoner said Friday that GM sold nearly 9.2 million cars and trucks worldwide in 2005, the most since 1978, casting doubt on forecasts that Toyota Motor Corp. might surpass GM as the world's automotive sales leader this year.
For the first time in its history, GM sold more cars outside the United States than inside. Not only did GM emerge as the market leader in fast-growing China, it also posted all-time sales highs in Latin America and Europe. The result was a 2% increase in global vehicle sales, despite a 4.3% drop in U.S. sales.
Toyota, the world's No. 2 automaker, sold 8.1 million vehicles last year and recently projected that it will build 9.06 million cars and trucks in 2006, leading to widespread speculation that it would blow past GM this year. Until the final 2005 numbers were tallied, it had been 27 years since GM sold 9 million vehicles in a year.
But GM's strong growth overseas suggests that Toyota can't count on being fitted for the crown just yet.
"We had a good sales year on balance around the world," Wagoner said in an interview with a small group of journalists. "Chevy is the big dog," he added, noting that Chevrolet sales surpassed 4 million units last year, up 180,000 units over 2004, "so that brand strategy is feeling pretty good."
Most recent headlines about GM have focused on its abysmal financial performance in North America, its weak credit rating and sagging stock price. But Michael Robinet, vice president of global forecasting services for CSM Worldwide Inc., said GM deserves some credit for its gains abroad. "I do think they've done a good job in South America, they've cleaned up some of their European issues and done a decent job in Asia," he said.
GM boosted sales 35% to 665,390 vehicles in China last year, surpassing Volkswagen AG to become the top-selling automaker in the world's fastest-growing auto market.
While pleasantly surprised at some of the final sales tallies from abroad, Wagoner acknowledged that he still faces the daunting task of turning around GM's car and truck operations in North America, where the company lost $4.8 billion during the first nine months of 2005.
Bankruptcy? No way
GM's losses, its slumping share of U.S. sales and the bankruptcy filing of its largest supplier, Delphi Corp., have triggered the downgrade of GM's credit rating to junk status and ignited fears that the company might join Delphi in bankruptcy court.
"We have to get that turned around," Wagoner said.
"We don't see bankruptcy as a winning strategy in any way, shape or form," he said. "It's not a good plan, and it is not constructive for there to be a lot of speculation about it. It doesn't help sales, and we don't have any intention of doing it."
He said he hadn't seen any analytical data to indicate consumers are shying away from GM products because of bankruptcy talk. "But it doesn't help," he said, adding, "We've got to get the business fixed. Then it will subside."
Wagoner said GM will get a lift this year with the launch of new large SUV models such as the Chevrolet Suburban and Tahoe and the Cadillac Escalade EXT.
Sales of the big, high-profit-margin SUVs took a tumble in 2005 -- falling 150,000 units -- due to a surge in gas prices and an aging product lineup.
GM will also introduce several crossover vehicles and will be giving the Saturn brand a makeover with the new Sky roadster and Aura midsize sedan.
Overall, he said, he expects 2006 auto sales to remain strong in Asia, while being "flat to downish a little in the U.S. and Europe."
U.S. share a question
He would not predict whether GM will be able to halt or reverse its slide in U.S. market share, which fell to 26.2% last year from 27.5% in 2004.
A big unknown casting a pall over GM's future profitability is what will happen to Delphi, which is seeking deep wage and benefit cuts from its labor unions.
The unions have threatened to strike if Delphi gets a bankruptcy judge to void its labor contracts. A Delphi strike could cripple GM production in mere days.
Wagoner said in late November that GM would become actively involved in three-way talks with Delphi and the UAW that could result in buyouts or early retirements for some Delphi workers, many of whom were GM employees before GM spun off its parts unit as a separate company in 1999.
Progress is being made in the complex Delphi talks, Wagoner said Friday, but he cautioned, "It's going to take a while."
Asked if the Delphi situation could be resolved in the next few months, he refused to predict a specific timetable except to say, "We're not going be sitting around talking about this a year from now."
Wagoner said he's confident that GM's cost-cutting plan, combined with new product launches, will produce an improvement in the profit picture, hopefully as early as this year's first quarter.
j/k I guess it's harder if you are the one who's stepping down.
