GM is on track to meet increased first-quarter and full-year earnings targets and is seeing the benefits of cost-cutting measures, the company’s chief executive told automotive securities analysts yesterday.
Last month GM reiterated its first-quarter earnings estimate of $1.20 a share and revised upward its full-year estimate from $3 a share to $3.50.
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“These are targets when we laid them out didn’t seem so easy, and they’re not easy now, but I think we’re getting some momentum in the first couple of months behind them,” Rick Wagoner told the analysts.
He also explained that through aggressive cost-cutting, GM has reduced the number of vehicles it must sell to break even from more than 5.4 million units in 1994 to a little less than 4.9 million. He said most of the previously announced head-count reductions in North America and Europe had been achieved.
However, Wagoner identified excess capacity in the US carmaking industry as a ‘chronic problem’. Cutting capacity could mean closing plants and cutting unionised jobs, which are currently subject to a labour deal with the Big Three makers.
Wagoner added that competition in the US market was still fierce, especially from the Japanese carmakers. Wagoner and other GM executives have repeatedly said that a weak Japanese yen was giving Japan’s carmakers a big cost advantage.
