Detroit Auto Show: GM Cuts Global, U.S. Auto Sales Forecasts

GM cut its 2009 auto sales forecasts for the U.S. market and the rest of the world, citing “the ongoing uncertainty of global market conditions.” For the United States, that means a forecast of only about 10.2 million cars and trucks in 2009, down from 13.2 million in 2008, or 16.1 million in 2007.

In turn, lower sales volumes mean GM has to lower its breakeven point even more, by cutting costs, cutting debt and gaining efficiencies. GM said previously it would be profitable on a pre-tax basis at U.S. industry volumes of around 12.2 million to 12.7 million.

“We know we have a lot of work in front of us, but we are already working closely with many key stakeholders. The GM team is 100 percent dedicated to achieving the goals of our plan,” said Rick Wagoner, chairman and CEO.

Despite the lower sales forecast, the company insisted in a Jan. 15 presentation to the Deutsche Bank 2009 Auto Analysts Conference in Detroit, coinciding with the Detroit auto show, that GM is on track to achieve the goals set out in a “viability plan” that was submitted to Congress in early December.

The plan formed the basis of a loan agreement with the U.S. Treasury Department on Dec. 19. The GM plan included a “baseline scenario” for about 11.7 million U.S. auto industry sales. The ”downside” scenario was 10.2 million. In effect, GM’s announcement means that GM now expects the downside scenario is most likely.

GM also hinted again, strongly, that it will drop Hummer, Saturn and Saab, which have all been put on “strategic review.” A slide depicting GM’s “future brand strategy” doesn’t include Hummer, Saturn or Saab.

In a separate presentation to the Society of Automotive Analysts on Jan. 13, Deutsche Bank auto analyst Rod Lache said he thinks GM needs a U.S. industry market of 14.8 million to break even, which he didn’t expect to happen until at least 2011. Still, the breakeven point is a much more achievable goal than it was, he said. In 2008, Lache estimated GM would have needed record U.S. industry sales of 18 million to break even.