DETROIT — After achieving post-bankruptcy records for profit margins and revenue in 2016, General Motors projects “another strong year” ahead for itself, despite challenges posed by growing inventories and flattening U.S. sales.
Matching last year’s performance could mean more production cuts in the months ahead to avoid heavy discounting on slow-selling cars. GM is counting on redesigned crossovers, including the Chevrolet Equinox and Traverse, to keep North American margins above 10 percent for a third consecutive year.
GM’s fourth-quarter performance underscored the headwinds it faces. Its adjusted earnings, before interest and taxes, fell 14 percent to $2.4 billion, and global margins declined to 5.4 percent from 7 percent in 2015.
Revenue rose 11 percent to $43.9 billion, but net income fell 71 percent from the same period a year earlier, when the company recorded a $4 billion accounting gain related to Europe.
GM CFO Chuck Stevens declined to discuss the potential for more production cuts but said the company would take such action whenever it sees a need and that he expects inventories to moderate as the year goes on.
“We continue to view the U.S. industry as healthy and supportive of our strong earnings outlook,” Stevens said on a conference call with analysts. “We will continue to manage inventories with discipline and take the necessary actions … to match car production with demand.”