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"Overall, we expect a more challenging environment across a
number of dimensions" in 2017, due to rising interest rates and
falling used-car prices, CFO Chuck Stevens told investors and
analysts on a conference call.
But thanks to an improving economy and lower fuel prices,
Stevens said GM believes "we're going to be in a reasonably
constructive industry environment."
Stevens said the No. 1 U.S. automaker will reduce inventory
levels, a concern for Wall Street, to around 90 days in June
from 98 at the end of March, and to around 70 days by the end of
2017.
He said a combination of solid economic indicators and
cost-cutting should help GM maintain profit margins of around 10
percent.
The CFO's conference call came just days after disappointing
U.S. new light vehicle sales figures for March showed an
annualized sales rate of around 16.6 million units.
Those figures had added to concerns that after a six-year boom
cycle that U.S. auto sales might be set for a decline.
Stevens said GM still expected U.S. new light-vehicle sales for
the industry at around 17.5 million units, after a record 17.55
million in 2016.
GM believes March figures were skewed by a mild winter that
meant sales were "more evenly distributed" across the first
quarter as opposed to prior bitterly cold winters, Stevens said.
GM still expects full-year earnings per share of $6.00 to $6.50,
he said.
Stevens said the company expected its used car prices to come
down around 7 percent this year as many leased vehicles return
to the market.
Investments in autonomous vehicle technology are adding around
$150 million in costs per quarter at GM, the CFO said.
The call came more than a week after billionaire hedge fund
manager David Einhorn publicized a plan to boost GM's value
based on creating two stock classes, one that pays a dividend
and another that does not.
GM rejected the proposal and rating agencies say it would
negatively affect the company's credit rating. Einhorn has
promised a proxy battle where he hopes to win board seats, but
has not released any names.
In a regulatory filing on Monday, GM announced a slate of board
nominees, all of whom currently serve on the board.
GM shares were up 24 cents at $34.24 after the call.
(Reporting by Nick Carey; Editing by Lisa Von Ahn and Nick
Zieminski)
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