GM Chief in Party Mood, Foretells 'Nice Start to Year'

20 December 2005

Speaking at General Motors' holiday party last week, chief executive Rick Wagoner was in seasonably bullish mode, carolling upbeat predictions into the ears of the assembled media pack.

"We are going to have a nice start to the year as we build and ship the new Chevy Tahoe, and that should help on the revenue side," Wagoner told the partying throng. However, he declined all invitations to predict when GM might emerge from its Mariana Trench of red ink.

With Japan's Toyota vying to become the globe's number one automaker in 2006 [WAMN: 12-Dec-05], some analysts have described GM's new line-up as a "make-or-break" effort.

A combination of factors - soaring healthcare overheads, high labor and commodities costs, loss of domestic market share to foreign rivals and southbound sales of SUVs - have triggered a loss of almost $4 billion this year.

A key element in GM's recovery plan is its recent deal with the auto unions that will save the company $1 billion in annual healthcare costs. GM also plans to slash 30,000 jobs and close twelve of its North American production units.

"We worked very hard on the healthcare deal but ... it will be a while before it affects the bottom line ... and that is somewhat frustrating," Wagoner said. "Launch vehicles [products that are eighteen months or less old] will become a larger part of the product mix in the next two years, reflecting a higher turnover of vehicles."

Data sourced from USA Today Online; additional content by WARC staff