GM COO: January US Sales Weak, Fleet Sales Down
21 Januar 2009 - 4:08AM
Dow Jones News
General Motors Corp.'s (GM) path to recovery is fraught with
uncertainty and potential pitfalls that could force more painful
restructuring in the years to come, Chief Operating Officer Fritz
Henderson said on Tuesday.
The industry already appears off to a tough start in 2009.
Henderson said January auto sales are shaping up no better than
last month, when GM's sales fell 31%.
The U.S. housing market that began the auto industry's downward
spiral will likely continue to get worse before it improves,
Henderson said. Meantime, cheap oil prices may stick around even as
federal regulations force auto makers to bring more fuel-efficient
vehicles to market, impairing the companies' ability to sell
smaller vehicles they're required to build.
"The situation can always get worse," Henderson said, speaking
at the Automotive News World Congress in Detroit. "We need to
accept responsibility for radical actions to address events that
are outside our control."
Despite the foreboding tone, Henderson reiterated his confidence
that GM's recovery plan, presented to the U.S. government as a
condition of winning up to $13.4 billion in federal loans. He said
GM's decision to ask for money to avoid a bankruptcy was a "sad
day" for the company.
"The happiest day of my career will be the day we repay the
loan," he said.
GM is awaiting a second installment of the loans approved in
December. The auto maker was expecting a $5.4 billion infusion on
Jan. 16.
Henderson said the auto maker is working with U.S. Treasury to
process the loans and expects to receive the cash soon, which the
auto company requires to fund its operations.
"What happens if we don't get the draw? We run out of money," he
said.
Henderson said oil prices will remain depressed in the near term
but will return to $130 to $160 a barrel in the next five years. GM
and other auto makers will be challenged to sell fuel-efficient
small cars and vehicles powered by alternative technologies while
gas prices remain low, he said.
Henderson described a meltdown of global auto markets today in
last year's fourth quarter that took GM by surprise.
Rising unemployment and a credit crunch in the U.S. combined
with an economic slump that spread around, slamming the auto maker
on all fronts, he said.
"We didn't necessarily see this freight train coming," Henderson
said. "2008 almost killed us."
Henderson said GM is still in preliminary talks with bond
holders over reducing its debt load and with the United Auto
Workers over labor cost reductions, both of which are key
requirements of the federal loans. More substantial talks will
begin after GM updates the restructuring plan it presented in
December.
The depth of GM's troubles at the end of the year will be
clearer when GM releases its fourth-quarter financial results,
expected within the next few weeks.
Henderson declined to weigh in on the announcement of a deal
between Chrysler and Fiat S.p.A. (F.MI) to establish a global
alliance.
"I am confident they will negotiate something that is quite
creative and quite clever," he said.
-By Sharon Terlep, Dow Jones Newswires; 248-204-5532;
sharon.terlep@dowjones.com
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