Wagoner Says GM Is Strengthening Finances

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Wagoner Says GM Is Strengthening Finances
Wednesday June 2, 11:31 am ET
John Porretto
Auto Writer Associated Press

WILMINGTON, Del. (AP) -- General Motors Corp. continues to strengthen its finances and enhance its product portfolio, but the world's largest automaker is not as profitable as it needs to be in key global markets, chairman and chief executive Rick Wagoner told shareholders Wednesday.

GM earned $1.3 billion in the first quarter of 2004, lifted by strong results at its financing arm and improved business in growing Asian markets. But the company said automotive operations in North America and Europe continued to be hampered by intense pricing pressure, including heavy consumer incentives.

Wagoner, speaking to about 100 shareholders at the automaker's 96th annual meeting, said he was encouraged by forecasts that global auto sales are expected to top 61 million this year for the first time. That figure includes roughly 17 million anticipated sales in the United States -- up from 16.7 million last year.

"But as we push for profitable growth, we also face a number of important challenges," Wagoner said. "First, we need to increase our core profitability in Europe, South America and North America as well."

In a recent report, Standard & Poor's said GM had made significant progress improving its competitiveness in North America -- helped largely by containing materials costs and introducing several new vehicles.

New vehicles aside, however, GM's competitiveness also remains linked to two important public policy issues, Wagoner said.

The first is health care costs, which the company has said represents a $5 billion annual expense.

Also, Wagoner said, unfair trade practices continue to hamper both GM and the entire U.S. economy, "especially the Japanese government's persistent policy of manipulating the value of the Japanese yen to keep it artificially weak versus the U.S. dollar."

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