Most automakers foresee a healthy 2018 overall with no significant volume losses, though the record sale days seem to appear over. However, General Motors product chief, Mark Reuss, said GM is ready if the auto market suddenly took a sharp downward turn.
In an interview with Trucks published on Tuesday, Reuss said the automaker is “ready” should some terrible event cause a major market crash.
“Our company still runs at the 10 ½- to 11-million unit break-even point,” he said. That kind of market crash would be incredibly severe, and Reuss believed such an outlook keeps GM more than safe, should it ever occur.
Although U.S. sales will likely remain healthy without major dips, China’s auto market continues to grow, which paints a brighter picture for GM. The automaker has also focused heavily on retail sales and worked to curb fleet sales in recent years. Meanwhile, GM delivered on its promise to handle ballooning inventories.
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This is what Mary and others have been working on in getting cost down at GM over the last so many years and getting the ATP per model up. It has increased their profitability to a point they can absorb a market decline.
Now Ford is struggling as they have spent much of their money on their Aluminum trucks and with the increase in material cost it has damaged their profits there. They also did little to lower their costs. If the market continues to decline it will do more damage to the stock prices that have hovered at $12.
Ford is not the only one that has not worked to lower cost so we may see some companies hurting if the market continues to decline or remains flat.
GM also even with cost cuts has invest in future product heavy and this will really help.
I hope their plans include a possible spike in gas prices. I have been in the auto industry long enough to remember 08. Truck and SUV/CUV sales plummeted almost overnight. With no real plan for appealing passenger cars in the line up, we all remember what CHAPTER came next. GM should learn from that and keep up on R&D, and a quick turnaround at assembly plants to be more car focused.
I think you will find that is why they still invest in cars and one of the several reasons they are investing into the number of EV models. The other reasons being the push for these vehicles in China, California and in Europe.
Also the number of small efficient SUV models has been increased and they are not done yet. Even my Acadia is now getting 27 MPG highway with a V6 and AWD. The smaller ones even better as well as the Diesel options.
GM has a well balanced approach they are in good hands right now with the three top positions. They compliment each other well. Mark on product, Dan on finance and Mary managing.
One thing GM did right is investing in their production facilities during the record sales years that were bringing in the cash . They have adjusted production to meet the slower demand and inventory levels are under control now .
Although sales should be flat at 16.5 – 17 million units for the industry that is still better than a decade ago and TAP’s are very healthy at all of GM’s divisions .
The only thing I see as a cautionary outlook would be Washington . With the problems surrounding the President and what he may or may not do as the FBI seems to be getting closer to interviewing Trump , if things don’t go well for him we just might see a downturn in stock prices at the NYSE and a huge correction , which is due anyway . Even today the GDP was down for the third quarter , not what was expected by Wall Street .
GM will have a healthy mix of cars , trucks and suv’s and is more flexible than Ford and Chrysler and GM is flush in cash right now .