GM Doesn't Expect Changes Related to Diesel Regulation Costs -- Update
October 01 2015 - 10:25AM
Dow Jones News
By John D. Stoll
MILFORD, Mich.--General Motors Co.'s product development chief
doesn't expect a meaningful shift in the cost of meeting diesel
emissions regulations following Volkswagen AG's current emissions
crisis.
Mark Reuss, speaking to reporters before the auto maker's annual
investor conference in suburban Detroit, said the company will meet
European emission standards even if regulators toughen up on
enforcement. He also said the company currently isn't forecasting a
significant increase in the cost of producing diesel engines and
that its technology is in compliance.
The comments come weeks into an emissions scandal that has
engulfed GM's large German rival. Volkswagen for years used
software in its so-called clean diesel cars to cheat on U.S.
emissions tests, and that practice has cost top leaders their jobs,
prompted a series of investigations around the world and will
likely lead to big fines and other unexpected expenses.
GM, meanwhile, says it is on pace to meet the targets it laid
out a year ago, Chief Executive Mary Barra told reporters. Those
targets include returning European operations to profit next year,
reaching a 10% operating profit in North America in 2016, and
hitting a companywide profit margin of 9% to 10% by early next
decade.
GM also plans to double earnings at the GM Financial lending arm
in 2018 compared with 2014 levels. In 2015, the company expects a
roughly 6.8% operating margin for the company and about $155
billion in revenue.
GM said it now plans for its annual free-cash-flow generation to
outpace operating earnings growth. That would enable continued
returns to shareholders, which has been a concern of investors of
late.
The auto maker is targeting $5.5 billion in purchasing,
manufacturing and administrative cost cuts by 2018, with a plan to
reallocate those funds to product and technology development. On
Thursday, the company will outline a series of initiatives under
way, including ride-sharing experiments in New York and several new
vehicles for Cadillac.
Among the more meaningful objectives outlined Thursday is a plan
to reduce battery cell costs by about 15% in 2020 from current
levels, and by more than 30% in 2022. Meeting that target could
help GM take a leadership role in the electric-vehicle market that
is currently occupied by Tesla Motors Inc., BMW AG and Nissan Motor
Co.
Write to John D. Stoll at john.stoll@wsj.com
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(END) Dow Jones Newswires
October 01, 2015 10:10 ET (14:10 GMT)
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