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September 25, 2009

US: GM chief sees “modest” 2010 recovery

General Motors CEO Fritz Henderson thinks the US new car market will see a modest recovery in 2010 with sales of 11.5m to 12m vehicles.

General Motors CEO Fritz Henderson thinks the US new car market will see a modest recovery in 2010 with sales of 11.5m to 12m vehicles.

“2010 will be a modest improvement,” he told Reuters at a business event in Orlando, Florida.

This year’s US market was on track towards 10m to 10.5m unit sales and a continued gradual recovery.

He later told business TV channel CNBChe expected 2011 sales around 13m units, near the level in 2008 before the sharp downturn began.

And he reiterated his earlier forecast that GM expected to reach break-even in the US market by next year.

“Break even … would be a 10m unit market and an 18% market share. We’re going to achieve that goal. We don’t need the market to be 14m or 15m (units) to make money,” Henderson was quoted as saying.

Henderson told CNBC he saw a more gradual increase in US sales than Ford CEO Alan Mulally who, earlier this week, said sales could reach 14.5m units.

Henderson said near 13m to 13.5m units “would be closer to where we would see it at this point.”

The September seasonally adjusted annualised rate would be slightly below or slightly above 9m units and would be near the lowest levels of the year.

Forecaster and market analyst JD Power has forecast that the US light vehicle market would see a substantial drop in September following the end of the ‘cash for clunkers’ incentives.

It projected September light vehicle sales of 710,000 units, down 29% year on year, and a seasonally adjusted annualised rate of 9.2m units, compared with a ‘clunkers’-boosted 13.8m in August.

Henderson also told CNBC China would “very much” be a priority market for the company this year, adding, “not just for GM”.

“The China market this year will be over 11m units,” he said, compared with just 2.3m in 2001.

Henderson, who has worked for GM in China, recalled that back in 2002 he had predicted the Chinese car market would outstrip the US market in a decade but said it had since grown faster than he had expected.

GM said in July that it expected more than 10% growth in its vehicle sales this year in China, its second-biggest market after the United States.

Henderson said he was thankful that the company had moved to increase capacity there in the early 2000s, despite criticism at the time that this was overly aggressive.

Referring to GM’s plans to sell a majority stake in Opel to a Russian-backed consortium led by Magna International, Henderson said he was negotiating to have the necessary agreements in place by early October and was confident this could be done.

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