GM Says It Has Room for More Cost Cuts

General Motors has room for additional cost cutting in its U.S. business, a top company executive said Sunday.

"We can definitely go further" with cost cutting, Chief Financial Officer Fritz Henderson told reporters on the sidelines of the North American International Auto Show.

From 2005 to 2007 General Motors, the No. 1 U.S. automaker, cut $9 billion in recurring costs. Henderson also said that the GM does not expect to modify its current business plan because of slowing U.S. economic growth and concerns about a slowdown on consumer spending.


GM chairman Rick Wagoner earlier on Sunday told reporters U.S. economic woes were a concern but he predicted that the second half of 2008 would be better than the first.

Wagoner also said GM would also have something to announce about additional layoffs in its unionized workforce "very soon."

Meanwhile, General Motors sales in North America have been tracking ahead of last year so far in January, supported by demand for the Chevrolet Malibu and Cadillac CTS, GM's North American sales chief said.

"The first couple of weeks of January were pretty good," Mark LaNeve said. "We're tracking ahead of last January; in fact, we are tracking ahead of the last two Januaries."

Retail Momentum

GM has been carrying some retail momentum into 2008 and that it has a chance to be a decent year, LaNeve said.

The Malibu, which was named the North American car of the year for the North American International Auto Show Sunday, has been selling quickly and GM does not expect to have enough of the sedans to meet retail demand until the second quarter, LaNeve said.

GM has less than a 30-day supply of the Malibu and has added production at a plant in Lake Orion, Michigan, to meet demand, LaNeve said. The car is also produced at a Fairfax, Kansas, plant.

LaNeve also told reporters GM believes some forecasts for industry North American sales in 2008 are far too bearish.

"Some of the draconian figures they are giving out, I don't think they are founded in any basis except negativism," he said.

Sales of cars and light trucks in the United States slipped to 16.15 million vehicles in 2007, down 2.5 percent from the year earlier, and many analysts and industry executives see a risk that sales could drop to near 15.5 million in 2008.

Thomas Stallkamp, a partner at private equity firm Ripplewood Holdings, said in November that 2008 sales could drop to 14.5 million vehicles.

"I don't think it gets down to a 15.5 million as some people are saying because I think manufacturers will spend to keep the volume up and if manufacturers are spending, we will spend at some level to stay competitive," LaNeve said.

"If everyone is going to be real aggressive to keep volumes above a 16 million unit industry (sales figure), than we would have to participate in that," LaNeve said.

The spending would not change GM's basic strategy of aiming to break the cycle of offering big incentives to spur sales, he added.