NEW YORK – If the economy continues to worsen and U.S. auto sales nosedive, the top executives of General Motors Corp., Ford Motor Co. and Chrysler LLC say they are prepared to weather the downturn.
Speaking at separate events in New York on Wednesday, Ford CEO Alan Mulally, Chrysler Chairman and CEO Bob Nardelli said their restructuring plans have cut factory capacity and other costs so they can make it through a deeper slowdown.
"We also stress-tested our business plan ... to be able to go if everything gets much, much worse, to go down lower and still be able to keep implementing our plan," Mulally said at the Morgan Stanley Global Automotive Conference. "So we have the cash, we have the liquidity. We just need to absolutely stay on our plan now."
Nardelli said at the New York International Auto Show that Chrysler prepared for a downturn in U.S. sales this year with layoffs and cuts in manufacturing and inventory. Chrysler announced in November it plans to cut 12,000 jobs, including 2,000 salaried jobs, by the end of this year.
Chrysler Vice Chairman and President Tom LaSorda said Wednesday that the automaker is making good progress persuading its hourly workers to take buyouts despite the faltering economy.
"We've never missed a manpower reduction target," he said. GM and Ford are also offering buyouts to almost all of their U.S. hourly workers.
Nardelli said that in its planning, Chrysler did not assume the economy will recover in the second half of this year as many automakers have. He said he expects total U.S. sales of 15.5 million in 2008, which would be the lowest level in a decade.
On Tuesday, automotive information company J.D. Power and Associates lowered its 2008 forecast for U.S. new light vehicle sales from 15.7 million to 14.95 million, the lowest level since 1994.
Westlake Village, Calif.-based J.D. Power said lower consumer confidence and spending, financial market turmoil and the industry's slow performance in January and February prompted it to update the forecast it released late last year.
GM Vice Chairman Bob Lutz said the company continues to believe sales will rise in the second half of the year and will end up similar to last year's total of 16.1 million. But if sales continue to slide, GM will take steps to cut costs, he said.
"Obviously, like any corporation, we will react to changing conditions," Lutz said. "If the stock market rebounds upward, it should ease the credit situation somewhat and bring back some consumer confidence."
Nardelli also said Chrysler will make further cuts if the market demands it.
"If we have to adjust, I would submit to you we probably have to adjust less than some of the other manufacturers because we already adjusted significantly," he said, pointing to the job cuts as well as cuts in the vehicle lineup and sales of some non-automotive assets.
Mulally told industry analysts that Ford, too, is ready even if U.S. auto sales drop to the low-15 million vehicle range this year.
He told the group Ford planned for overall U.S. market sales of 15.7 million for the full year, but during the first two months it's running around 15.3 million.
That's at the low end of what Ford predicted for the first part of the year, but Mulally said the company's restructuring efforts are on or ahead of plan, preparing it for trouble.
"As hard as it is, as many people and facilities that it affected, it's really going well," he said of the plan.
Jim Press, vice chairman and president at Chrysler, said one bright spot in the slow economy is that it affects all automakers equally. Of all major automakers, only Honda Motor Co. saw a substantial sales increase in February.
"It rains on all sides of the street," Press said.
GM shares fell 38 cents, or 2 percent, to close at $19.03 Wednesday while Ford shares rose 16 cents, or 3 percent, to $5.45.