CEO: GM Should See Better Revenue in 2006
{{#rendered}} {{/rendered}}General Motors Corp. (GM) should see improved revenue in 2006, driven by its new line of full-sized sport utility vehicles and trucks, Chief Executive Rick Wagoner said on Thursday.
"We are going to have a nice start to the year as we build and ship the new Chevy Tahoe, and that should help on the revenue side," Wagoner said, speaking on the sidelines of GM's holiday party in Sterling Heights, Michigan.
Wagoner declined to say when the automaker might return to profitability, but said he was optimistic about the soon to be launched GMT-900 series -- a line of redesigned SUVs with better fuel-efficiency.
{{#rendered}} {{/rendered}}The GMT-900 series, hailed by analysts as critical to the future of GM, includes Chevy Suburbans, Tahoes and GMC Yukons. Some analysts have called the line the "make-or-break" series for the automaker.
The world's largest automaker has lost nearly $4 billion this year as it struggles with high labor and commodities costs, loss of U.S. market share to foreign rivals and slumping sales of its SUVs - longtime cash generators for the auto giant.
A recent easing of gasoline prices has done little to reverse a shift in U.S. consumer sentiment away from fuel-thirsty SUVs and pickups.
{{#rendered}} {{/rendered}}Wagoner said the recent slump in SUV sales was due, in part, to market demand, but mainly because GM had cut back on inventory to ready itself for the new models to be launched next year.
As part of a broader restructuring plan the company plans to slash 30,000 jobs and close 12 facilities in North America. GM has also negotiated a deal with its union that would save it $1 billion in annual healthcare costs.
"We worked very hard on the healthcare deal but ... it will be a while before it affects the bottom line ... and that is somewhat frustrating," Wagoner said.
{{#rendered}} {{/rendered}}Speaking about the production line-up for next year, Wagoner said he expected "launch vehicles" -- products that are 18 months or less old -- to become a larger part of the product mix in the next two years, reflecting a higher turnover of vehicles.
GM, which made its first hybrid power pickup trucks available in 2005, plans to launch its first hybrid sedan -- the Saturn Vue -- next year. The hybrid will compete with popular rivals such as the Toyota Prius and the Honda Civic Hybrid.
Wagoner said he did not know how many hybrids the automaker will make, because of the uncertainty of the size of the hybrid market. But he would like the company to have the capacity to ramp up production, he said.
{{#rendered}} {{/rendered}}"We need to get the price value equation right. We have to get the reliability right and the consumer needs to have enough time in it to see they are getting the benefit," he said.
Hybrids account for less than 1 percent of total U.S. vehicle sales, but demand is growing rapidly. Hybrid registrations in the United States were up 81 percent in 2004 to 83,153, according to automotive research firm R.L. Polk.
Toyota Motor Corp., which many analysts say will overtake GM as the world's largest automaker soon, is the biggest hybrid manufacturer with a 64 percent market share in 2004, according to research firm J.D. Power.
{{#rendered}} {{/rendered}}Honda Motor Co. Ltd. is the second-largest hybrid manufacturer with 31 percent of the market in 2004, according to the same data.
GM plans to launch a third hybrid system in partnership with DaimlerChrysler AG (DCX) in 2007.