Global car sales are expected to top 61 million vehicles for the first time ever this year, which will help General Motors face mounting health care costs and Japan’s “unfair trading practices”, CEO Rick Wagoner said on Wednesday.
GM needs to become more involved in public policy regarding health care and the Japanese government’s “persistent policy of manipulating the value of the Japanese yen to keep it artificially weak versus the US dollar,” Wagoner told shareholders at the company’s annual meeting, according to Reuters.
The news agency noted that GM’s profit from its core vehicle-building operation have sagged in recent years, but its overall earnings have been boosted by its financial services unit GMAC.
According to Reuters, GM executives have said repeatedly that Japan’s intervention in the currency markets gives Japanese carmakers an unfair advantage in the US market and fuels their high profits from US car sales. The Japanese automakers reportedly have disputed that, saying that their strong US sales are driven by higher quality and superior vehicles.
Wagoner reportedly said that, given GM’s high fixed costs, including an annual health care bill of $US5 billion and growing, the carmaker must stay aggressive in the marketplace to generate cash and keep sales strong and revenues growing.
“In a soft global economy and a competitive auto industry, we’ve had to be very creative and aggressive in the marketplace, and push for every single sale, all around the globe,” Wagoner said, according to the report.
Higher incentives have hurt earnings from GM’s core automotive operations. According to Reuters, one shareholder pointed out that last year, GM earned more from its financial services unit GMAC than from its automotive operations.
Wagoner reportedly said he was encouraged that in the first quarter, GM posted stronger operating earnings, grew market share in three out of four regions of the world and strengthened its balance sheet.
However, GM needs more profits from its automotive operations in Europe and North and South America, Wagoner told shareholders. GM’s European car operation has been losing money for years, and is in the midst of formulating a new plan to cut costs there and return it to consistent profitability, executives have said, Reuters noted.