US Downturn Has Bottomed-Out, Claims General Motors

30 October 2008

DETROIT: In 1952 former GM president Charlie Wilson famously told the US Senate: "For years I thought that what was good for our country was good for General Motors, and vice versa." And despite the controversy sparked by that statement, history has largely proved him right.

Many hope this is still the case, especially after the auto giant's statement yesterday (Wednesday) that it believes the US has reached the bottom of its economic landslide. 

Says GM's head of global marketing and industry analysis Michael DiGiovanni: "We believe the US is probably in the trough of its downturn right now."

And lest some believe that to be PollyAnna-ish thinking, DiGiovanni cites the recovering dollar, falling oil and commodity prices and rising housing starts as "positives" for GM's business.

He also points to actions taken by the US government to stabilise financial markets that have laid the foundations for recovery. 

But GM itself remains in sickly state, reporting an 11.4% fall in third quarter sales to 2.1 million units. In the year to date aggregated sales are 6.7m, down year-on-year by 5.8%. 

However, the continuing shrinkage of US sales has been partially compensated by the growth of its overseas operations, with 63% of its Q3 sales coming from outside the US versus 58% last year.

Sales in Latin America rose by 3.4% and in Asia were up 2.6% in the same period.

Meantime, GM's future lies in the respective palms of rival automaker Chrysler, with which it hopes to merge; and the US taxpayer, whose largesse, it hopes, will provide the marriage dowry.

Data sourced from Financial Times; additional content by WARC staff