General Motors faces a tough market, and rising commodity costs will make it “very difficult” to meet a $1bn cost savings target this year, GM chairman and chief executive Rick Wagoner told the annual shareholders meeting on Tuesday.
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“There will be some challenging months ahead on a total sales basis,” Wagoner reportedly said as he updated investors on progress of GM’s restructuring at the start of the company’s annual shareholders’ meeting.
According to Reuters, Wagoner said a priority for GM management was “maximising” the success of a buyout programme offered to its unionised work force and closing the sale of a majority stake in its finance arm, GMAC.
In response to a question, Wagoner said GM remained in “active discussions” with former subsidiary Delphi and the unions who represent workers at the bankrupt auto parts supplier aimed at a negotiated settlement that would avoid a labour disruption.
“We believe we can do that, although it’s going to take some time,” he said according to the report. “One outcome will be a broader diversification in our supply base.”
Wagoner, who first outlined GM’s restructuring plans at last year’s annual meeting, reportedly pointed to the progress the company has made in its turnaround efforts over the past 12 months.
GM, which lost $10.6 billion in 2005, is on track to cut $7 billion in structural costs in North America, Wagoner reportedly said, which should position the automaker for sustained profitability.
Meanwhile, GM’s new vehicle launches, which only accounted for 20% of sales last year, are running at 30% this year and are on track to hit 40% next year, he said, according to Reuters.
According to the news agency, Wagoner told shareholders GM had no plans to drop any of its brands, despite suggestions that its eight nameplates are not sufficiently differentiated for car buyers.
Reuters noted that GM stockholders will vote on Tuesday on several proposals being watched as indicators of the degree of investor anger.
Influential proxy advisory firm Institutional Shareholder Services has endorsed proposals that would weaken Wagoner’s influence and could open the way for an overhaul of the board, it said.
ISS reportedly said it supports four shareholder proposals opposed by GM’s board – these would split the positions of chairman and CEO, recoup executive bonuses awarded when results are later restated, establish cumulative voting for board seats, and require a majority vote total to elect directors.
