GM CEO Sees Weaker December Sales
DETROIT – General Motors Corp. (GM) Chief Executive Rick Wagoner (search) said Friday the automaker's U.S. sales would fail to match last December's strong levels.
GM's U.S. sales have fallen about 1 percent this year, and the automaker has lost nearly a full percentage point in market share, despite high sales incentives.
"Sales so far (in December) are going OK but, as you know, (there are) huge sales normally in the last week between Christmas and New Year's," Wagoner told reporters following a press event.
"Last year was obviously a boom year there, and we aren't going to make those kind of numbers this year. But we're hoping for a strong close," he said.
Last December, GM's U.S. market share hit nearly 31 percent, far above its total market share for 2003 of about 28.2 percent for its U.S. brands.
Last week, GM launched its "Red Tag Sale (search)," its latest U.S. incentive program which offers cash rebates of up to $8,000 on 2004 models, and up to $5,000 on 2005 models. Earlier this month, GM also said it expected its vehicle production in the 2005 first quarter to fall about 7 percent from the previous year's first quarter.
Banc of America Securities analyst Ronald Tadross said GM, which has led Detroit's incentive wars to try to keep its U.S. market share up, may become less aggressive in the market.
"GM appears more focused on improving pricing and more tolerant of share loss, at least in the short term," he said in a research note Friday. "This can be good for EPS (earnings per share)," he added.
Wagoner said Friday that GM will continue to push for market share, but added that he does not see a major change in incentive levels across the industry.
"I don't see any radical changes in general incentive levels," he said. "They have tended to trend down a little bit as the year has gone on, with the exception of the close-out of the '04 (model year). Based on what we see in the economy next year, I don't see any big change in that general trend."
Wagoner reiterated previous statements from other GM executives that the automaker would not hit a "mid-decade" target of earnings of $10 per share next year.
"It depends on how you interpret 'mid,' but it doesn't look like next year is going to be the year," he said.
GM executives have said that the automaker may not hit the $10 per share target until 2006.
Wall Street analysts on average expect GM to earn $5.08 per share next year, down from an average estimate of $6.31 per share for 2004, according to Reuters Research.