GM CEO Says July Sales Appear Weaker Than One Year Ago

July 15, 2009 - 6:19 AM
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Ann Arbor, Mich. (AP) - General Motors’ top executive described July auto sales as weak compared with the same month last year, but said it's still early.
 
CEO Fritz Henderson, speaking to reporters Tuesday at an event to launch the redesigned Buick LaCrosse sedan, said it seems like industrywide U.S. sales will once again fall below an annual rate of 10 million vehicles this month.
 
The new GM, which just emerged from Chapter 11 bankruptcy protection on Friday, has said its debt load and other expenses have been reduced so much that it can become profitable at a 10 million to 10.5 million annual sales rate. The struggling automaker has lost more than $80 billion in the past four years and has received $50 billion in loans from the U.S. government.
 
U.S. industry sales so far this year have been running below a 10 million annual sales rate as the economy has sputtered. GM's sales for the first half of the year are off 40 percent, while the overall U.S. market is down 35 percent.
 
Henderson said the company has struggled all year with weak sales while trying to significantly reduce its dealer inventory, but the inventory problem has been corrected. He said he's optimistic about a second-half recovery in auto sales because most of the government's economic stimulus measures have not yet kicked in.
 
"Certainly there's a huge amount to be yet injected into the economy and I think we're pretty optimistic about it," he said.
 
Also, the government's "cash for clunkers" law has not fully taken effect. The program gives owners of inefficient, older vehicles up to a $4,500 incentive to trade them in on more efficient models.
 
GM is hoping some will consider the LaCrosse, which the company is counting on to help bring younger buyers back to the Buick brand. The average age of the current LaCrosse buyer is around 70, and GM is hoping to lower that into the 50s with a product that is far more competitive with similar-size models from Japanese luxury brands Lexus and Acura.
 
The LaCrosse, on midsize car underpinnings but stretched into the large car category, is the first new GM vehicle to be introduced after the automaker's 40-day stay in bankruptcy protection. It is due in showrooms in about two weeks.
 
GM has high expectations for the sedan, which engineers say has the quietest wind noise level in company history, in part due to aerodynamics and windshield and front-seat side windows made of glass laminated with quieting plastic in the middle.
 
Mark Meyers, a GM engineer who is in charge of the LaCrosse's performance, said GM tests showed the car tied the Mercedes S Class sedan in wind noise levels, even though it costs far less. The Mercedes has a base price of $90,225 while the LaCrosse has a sticker price of $28,585. Both prices include shipping.
 
The old LaCrosse was not a big seller and was much more like Buick's current image of stodgy cars for old men. So far this year GM has sold only 9,942 LaCrosses, with sales off 53 percent. The company stopped building the old version late last year.
 
Advertising for the LaCrosse, which GM is hoping will compete with Lexus and Acura, already has started to hit television stations, with the main ad featuring a director shooting an artsy commercial of the LaCrosse on a beach.
 
Henderson, indicating that change is coming in GM's marketing efforts, called the new LaCrosse ads "fine" but said they are not good enough to accomplish what GM needs to do to sell more Buicks.
 
"We need to do better, period," he said.
 
Henderson on Friday placed Vice Chairman Bob Lutz, the company's former product development chief who was to retire in December, in charge of marketing.
 
"He's not the most hesitant person I know. He's quite capable of doing what he needs to do," Henderson said.
 
Lutz has been credited by industry analysts with rebuilding GM's product portfolio and stressing more cutting-edge designs.
 
Henderson said GM will slightly reduce spending on marketing since it soon will have only four brands, Chevrolet, Buick, Cadillac and GMC. But that means there will be far more spent on each brand than in the past, he said.
 
GM is in the process of selling or discontinuing Pontiac, Hummer, Saab and Saturn.