GM Lowers Outlook For Industrywide Sales -- WSJ
June 27 2017 - 3:02AM
Dow Jones News
By Mike Colias
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the US print
edition of The Wall Street Journal (June 27, 2017).
General Motors Co. expects industry vehicle sales to fall short
of its original forecast for the year, the latest sign of a
slowdown in the U.S. auto market after a record run.
GM now expects U.S. light-vehicle sales in the "low" 17-million
range, down from an earlier expectation that this year's tally
would roughly match the 17.55-million record from last year,
finance chief Chuck Stevens told analysts during a conference call
Monday.
Mr. Stevens also said U.S. pricing has become "very, very
competitive" amid slowing sales during the first several months of
the year. But he said incentives have moderated recently, a sign
that car makers aren't willing to cut into profitability to
maintain market share as demand cools.
"It appears the industry is becoming a bit more rational," Mr.
Stevens said.
Industry sales in each month so far this year have fallen from a
year earlier. In a note to investors Monday, Barclays analyst Brian
Johnson said he expects the seasonally adjusted sales rate to ease
to 16.5 million in June. That would mark the fourth straight month
that the pace of sales fell below 17 million, the slowest stretch
since mid-2014.
But Mr. Johnson agrees that auto makers "may be drawing the
line" on big discounts that have helped fuel sales over much of the
past year. He said incentives in June were at the lowest levels in
about a year. Auto makers also are pulling back on less-profitable
sales to rental companies, a tactic long deployed to sustain sales
volumes during a market downturn.
Separately, GM raised its estimate for special charges it will
incur from the sale of its Opel AG European division, to $5.5
billion, about $1 billion higher than originally expected. Mr.
Stevens said heavier costs linked to the consolidation of some
vehicle programs under the deal is a primary factor, describing the
charges as "largely noncash."
GM announced the deal in March to sell Opel to France's Peugeot
for about $2.1 billion, exiting a business that has suffered
billions of dollars in losses over nearly two decades. Mr. Stevens
said the sale is on track to close by the end of the year.
He said GM will report Opel results as discontinued operations
beginning with the auto maker's second-quarter earnings, scheduled
for July 25.
GM also said it will tap about $3 billion in short-term debt to
help pay for pension-funding obligations that Peugeot will inherit
once the deal closes.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
June 27, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
General Motors (NYSE:GM)
Historical Stock Chart
From Aug 2024 to Sep 2024
General Motors (NYSE:GM)
Historical Stock Chart
From Sep 2023 to Sep 2024