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General Motors Gives Aggressive Outlook

October 2, 2014
2 min to read


American consumers are buying new cars and trucks at the strongest pace in years, offsetting car makers' troubles elsewhere and leading the biggest U.S. auto maker to forecast fat profits ahead, reported The Wall Street Journal.


Overall U.S. sales rose 9% last month compared with the same period in 2013 to a nearly decade high. Demand for highly profitable sport-utility vehicles, once scorned as Detroit's gas guzzling cash cows, continues to rise amid low fuel prices and more efficient designs.

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SUVs and pickups were largely behind last month's strong gains at General Motors Co. Fiat SpA's Chrysler, Nissan Motor Co. and Honda Motor Co. Only Ford Motor Co., which confronts a change in its truck line, went in reverse during September.


Feeding that appetite for new cars will be key to building and repairing overseas units. So far, the outlook is sound. "A lot of analysts have been beating the drum for the past couple months [saying] that this will soon end," said Fred Diaz, Nissan's U.S. sales chief. "I don't see it."


U.S. buyers' role in financing the future at GM and Ford were clear despite the contrasting visions laid out this week by the chief executives at the two biggest U.S. car makers. GM CEO Mary Barra pledged to get near 10% operating margins in North America and to halt losses in Europe by 2016.


Her crosstown rival, Ford CEO Mark Fields, is projecting long-range margins just shy of GM's and using North American profits to finance a global market share push that seeks to tap Asia's emerging markets and revive its faded luxury brand.


Mr. Fields' plan hit a sour note with investors, sending shares to six-months lows over guidance for short-term profit declines, much of which is due to troubles in emerging markets.

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GM shares gained 1.7% to $32.49 Wednesday on Ms. Barra's plan, but remain below the $33 price fetched in their 2010 initial public offering. GM's market value is nearly $53 billion, trailing Ford, Toyota Motor Corp. 7203.TO -2.85% and Volkswagen AG VOW3.XE -2.25% .


Simplification is the cornerstone of the visions presented this week by Ms. Barra and Mr. Fields. GM and Ford, long criticized for running sprawling businesses where executives weren't challenged to collaborate, both are rushing to lower the number of vehicle platforms that provide the underpinning for the cars in their lineups.

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