GM Expects "Improved Results" In 2006

[Perian]

Link: wsj.com

DETROIT -- General Motors Corp. (GM) expects its "turnaround plan" to deliver "improved results" in 2006, including a $4 billion reduction in operating costs, and "further progress in 2007," Chief Executive Rick Wagoner said Friday.

Wagoner, speaking to securities analysts in Detroit, said he expects 29% of General Motors' 2006 sales in North America to come form "recently launched" and upcoming models. The executive expects the figure to exceed 30% by 2007.

The statement comes after General Motors introduced several new models at the Detroit auto show, including a new Chevrolet Camaro.

Last fall, GM flirted with financial peril after its main parts supplier and former subsidiary, Delphi Corp. (DPH), filed for bankruptcy, leaving GM on the hook for pension payments to many of Delphi's union workers.

The company presented a recovery plan aimed at lowering structural costs by $6 billion a year.

On Friday, GM said it now plans to reduce structural costs to 25% of revenue by 2010 from its current level of about 34%, to "enhance GM's earnings power and financial flexibility."

Based on estimated 2005 revenue of $158.55 billion, nine percentage points is about $14.27 billion.

As part of its previously announced plan, GM won an agreement with the United Auto Workers to reduce long-term health-care costs.

The company expects to see $4 billion in savings in 2006 from the overall recovery plan.

[Perian]

GMAD has certainly done its' part - My local Chevrolet dealer has six new Tahoes in stock.

Find one near you - the 07's are up @ www.gmbuypower.com

[mbukukanyau]

Please do not post these thing.. We have heard alot on this topic. lets focus on product.

[goblue]

Originally Posted by mbukukanyau

Please do not post these thing.. We have heard alot on this topic. lets focus on product.

Actually - product is not what will save GM. UAW paycuts and outsourcing leading to more money for better product and profit margins is what will save GM.

Went to the NAIAS this week, its not the vehicles that are the problem, its the cost cutting. In everything from the Solstice to the Fusion its painfully obvious. GM and Ford, and Chrysler are using cheaper materials and features to support its legacy and elevated labor costs.

[Canyonaro]

I think it is valid, some people want to know what GM plans to boost to profits instead of what most think of them as it just sitting in mud crying. I look forward to this year and hope GM will start making money.

They have great new product potential, but I want to see it happen and fast.

[MrMax]

Product isn't the only thing needed to save GM, but it is the largest factor. You can make all the budget cuts in the world, but if at the end of the day no one wants your product, all you've bought yourself is more time. When all is said and done, products that the consumer is willing to pay for is what will be needed to turn the company around.

[New_Mexico_Sunset_on_Rt66]

That's what they said about '05 also. It's takes time for consumers to warm to your products, especially have been "burned" by them in the past.

The new Tahoe/Yukon should bring in new buyers. The Equinox should continue to do well, I've seen many around Cedar Rapids. The HHR should do better. I may see a few more Solstice's on the road once the weather warms up.

I would say things are definitely looking up for GM the next 5 years. I am really stoked about the upcoming products. I am also excited about the design direction with a few "heritage" inspired products scattered amongst the more "contemporary" products. The material selection appears to be improving also.

[worr]

Originally Posted by Perian

Wagoner, speaking to securities analysts in Detroit, said he expects 29% of General Motors' 2006 sales in North America to come form "recently launched" and upcoming models. The executive expects the figure to exceed 30% by 2007.

The statement comes after General Motors introduced several new models at the Detroit auto show, including a new Chevrolet Camaro.

How does the Camaro boost 2006 sales? Even 2007?

[Geotpf]

Originally Posted by goblue

Actually - product is not what will save GM. UAW paycuts and outsourcing leading to more money for better product and profit margins is what will save GM.

Went to the NAIAS this week, its not the vehicles that are the problem, its the cost cutting. In everything from the Solstice to the Fusion its painfully obvious. GM and Ford, and Chrysler are using cheaper materials and features to support its legacy and elevated labor costs.

The use of cheaper materials IS a product problem, arguably the ONLY product problem. The use of cheaper materials is probably the main reason GM (and Ford and Chrysler) have worse reliability than Toyota and Honda. There is much ancedotal evidence from companies that supply both GM and Ford and Chrysler, as well as Toyota and Honda's US plants, that the American make specify looser tolerances and lower quality materials than Toyota and Honda, so they can pay less for such parts.

[01cavalier]

I'd much rather see this than all the negative stuff that was on just about a month ago. It may not be all that positive, but at least makes it seem that a reasonable turnaround is possible.

[goblue]

Originally Posted by Geotpf

The use of cheaper materials IS a product problem, arguably the ONLY product problem. The use of cheaper materials is probably the main reason GM (and Ford and Chrysler) have worse reliability than Toyota and Honda. There is much ancedotal evidence from companies that supply both GM and Ford and Chrysler, as well as Toyota and Honda's US plants, that the American make specify looser tolerances and lower quality materials than Toyota and Honda, so they can pay less for such parts.

Exactly. I guess I was trying to say if GM could get the cost issue solved the rest will fall into place. I expect the more expensive vehicles to be fine, but anything with a base price under 20K is problematic because they are down 2K over their competiors. On a 40K SUV, that just means 2K less profit than competitors, but on a 18K G6, it means a below average everything.

The UAW is starving GM of the money it needs to be competitive, and the Trucks/SUVs can no longer make up the difference now that they have to be a better value due to gas costs and foregin competititon.

[cfch3399]

Good to hear. But of course, there's no silver bullet for GM. Not just product, not just cost savings/materials savings (rather increase material costs). But all of it plus internal operations, way of doing things, way of thinking. As many critics say, the old way of doing things got them here. Basically they've got to become like a brand new company with a new mindset, fresh ideas, and the enthusiasm of someone just starting his own business.
I would still like to see GM spend less on marketing and be smarter what's spent on it. And focus more on midsize and large sedans not just on large SUVs and funky SUVs.

[Buick61]

Yeah...and I expect to gain 15 pounds of muscle this year. Doesn't mean it's going to happen.

Let's wait and see how much of an effect the GMT900s and the Value Pricing, Part duex have.

[Buickman]

We hear the same every year, with the same results. Are memories that short?

[saturnsteve]

What's that saying, "A LITTLE LESS TALK AND A LOT MORE ACTION!!"