DETROIT -- General Motors lowered its forecast for U.S. and global sales this year, saying the lowered assumptions will push it to make tougher operational decisions.
The new estimate for U.S. sales is 10.5 million, GM said in a statement today. As part of its viability plan submitted to Congress last month, the automaker had projected sales in the 10.5 million to 12 million range.
The automaker must show by Feb. 17 that it is able to meet conditions in a package of $13.4 billion in rescue loans granted by President Bush. GM has received $4 billion so far and is scheduled to receive another $5.4 billion tomorrow.
We are on track to accomplish the requirements of the viability plan, CEO Rick Wagoner said in the statement. We know we have a lot of work in front of us, but we are already working closely with many key stakeholders.
GM also said global sales would fall to 57.5 million vehicles this year, down 6.3 million from the previous forecast, and lowered its projections for global industry volume through 2012.
Wagoner, COO Fritz Henderson and CFO Ray Young presented an update on GMs restructuring efforts today at a Deutsche Bank conference for auto analysts in Detroit.
Were not trying to structure to get through, Wagoner said. Were trying to structure to be very competitive. Were not constraining ourselves by the way we structure the business.
On a global front, Henderson told analysts that his big focus is on monitoring European cash levels. GM has been shifting product mix toward smaller cars and raising prices in the United Kingdom, its biggest European market.
We feel very good about our product cadence in Europe, Henderson said.
Various European governments have offered to discuss financial assistance for GM, Henderson said. But GM wants to make sure if it accepts money, the financing fits with the long-term viability plan.
Henderson said GMAC Financial Services is in a stronger position to provide financing to GM dealers this year. But GM had to surrender much of its 49 percent stake in the finance arm in order for it to win holding company status and get access to the federal funds. Henderson said it was worth it.
My feeling is that 49 percent of a finance company that cant finance itself doesnt hold much value, Henderson said.
While GM still expects weak fleet and retail sales during the first quarter, he said dealers report showroom traffic is improving.
Theyre still not closing deals, though. Wagoner said credit availability is still a big factor.
GM lease penetration was about 5 percent at the end of 2008. Henderson said lease penetration at GM will remain low this year.
GM did not release its rate of cash burn. In an interview late last year with Automotive News, Wagoner indicated it had dropped back to the $1 billion a month from $2 billion a month during the volatile third quarter.
GM is talking with its various stakeholders including the UAW, Henderson said. When asked if attaining labor cost parity with foreign automakers would require a UAW wage cut, Henderson said no.
I think whatever [Ron Gettelfinger] negotiates, he plans to take back to his members for ratification, Henderson said. If you look at the wages of Toyota, Nissan and Honda workers, they make some variable payments too, so it turns out theres not a significant difference, really. So you have to look at other issues.
Wagoner said all GM stakeholders must make sacrifices in the survival plan.
Theres a lot of share of pain, Wagoner said. Right here sitting at this stage, there are salary cuts, no bonuses, no perks.
Wagoner said that is more than what other recipients of government funding have been required to take.