Chicago: General Motors Corp. is expecting “challenging headwinds” in the coming 12 months, but according to the automaker’s top executive, GM was driving home its turnaround plan.
GM’s chairman and chief executive, Rick Wagoner, said US auto industry sales would likely be “weak” during 2008, partly due to high fuel prices, but he said GM was committed to achieving fresh cost cuts.
“We’re delivering on the turnaround plan we established in 2005, and have exceeded expectations on virtually all counts. At the same time, it’s clear that we’ll face some challenging headwinds in 2008,” Wagoner said in a statement.
Some economists believe the US economy will be lucky to dodge a recession this year amid a prolonged housing slump, tighter credit, high energy costs and recent declines on US stock markets.
Wagoner said GM’s top managers were focusing on several priorities to boost the company’s prospects. GM posted a record $39 billion loss during the third quarter of last year, largely due to a massive accounting charge.
The GM CEO outlined the priorities as further cost cuts, building business in emerging markets, further global integration, and strengthened distribution channels among other measures.
Company executives based in Detroit have targeted growth in China, Brazil, Russia and India as key to GM’s future overseas success. GM sold over one million vehicles in China last year, becoming the first automaker to win such sales in a single year in the fast-growing Asian powerhouse.
GM, which is facing fierce domestic competition from Asian automakers such as Japan’s Toyota, said it plans to reduce its annual US labor costs by an additional estimated $5 billion by 2011 to support its turnaround ambitions.
The company also wants to cut its structural costs to benchmark levels of 25% of revenue by 2010.
GM said its mortgage business continues to be buffeted by the US housing slump, but said its auto financing business remains profitable despite rising economic uncertainty.