GM sees softer Q2 sales; summer incentives
NEW YORK (Reuters) - General Motors Corp.'s GM.N U.S. sales will be softer in the second quarter than it initially thought it would be, due to the overall condition of the auto industry, the head of GM's North American operations said on Wednesday.
"We thought the market would be stronger," Troy Clarke told reporters on the sidelines of the New York International Auto Show. He said the automaker is scaling back production on some cars and midsize sport utility vehicles (SUVs) to cope with the weaker demand.
GM, which lost $10.4 billion in 2005 and more than $3 billion in 2006, has been struggling with high labor costs, stiff competition from Japanese automakers and slumping sales of profitable SUVs and trucks.
The U.S. industry is also expected to be slightly weaker this year as a softer economy, high interest rates and pressures on the subprime mortgage market dampen demand for new vehicles.
GM's sales chief Mark LaNeve on Wednesday said GM plans to increase incentive spending on full-size pickup trucks in 2007. Pickups, often bought by construction workers, have been hurt by weak housing starts.
"We look for that incentive level to rise, we hope modestly," LaNeve said. GM's Clarke also said the automaker would offer summer incentives on various vehicles this year.
GM's U.S. sales fell 7.7 percent in March, driven by big declines in pickup trucks and sport utility vehicles.
Sales of GM's Chevrolet Silverado pickup fell 12 percent, while GMC Sierra purchases were down 18 percent in March.
But LaNeve said the automaker's pricing, incentive and marketing strategies have helped stabilize retail sales at a seasonally adjusted annual rate of about 3 million units.
GM, which is in the middle of a sweeping restructuring that includes slashing more than 34,000 jobs and closing of 12 plants, has been sticking to a strategy of lower prices, but fewer incentives.
For decades, the world's largest automaker has been known for a complicated pricing system that offered big, profit-reducing incentives.
MINICAR TRIO
Separately, GM unveiled three concept mini-cars at the show, designed in South Korea. Product chief Bob Lutz said the cars could be launched 18 months in Europe and Asia.
Lutz declined to comment on where the cars would first be built, but said India and China were "logical candidates."
He also said the mini-car will be branded Chevrolet in all markets except South Korea, where the identical vehicle will be launched under the Daewoo brand.
The vehicles could give GM a much-needed foothold in the growing minicar market, which is largely dominated by Japanese automakers.
Lutz said the minicars will not be launched in the U.S. market unless gas prices rose significantly "and stayed high for a couple months."
"There just isn't enough demand in the U.S. for such small cars right now," he said.
