General Motors Company (NYSE:GM), which lost the world No.1 position to Toyota Motor Corporation (NYSE:TM) in 2012, said during the Deutsche Bank Global Auto Industry Conference in Detroit that it expects a modest rise in its profits this year. GM chief financial officer, Dan Ammann, said Tuesday that the company is gaining strength in the U.S. and Chinese auto markets, but contraction in Europe is a cause of worry.
General Motors Company (NYSE:GM) hadn’t given any earnings forecasts since it filed for bankruptcy in 2009, the company has since recovered, and is about to report its 12th straight quarterly profit. The company said that earnings before interest and taxes will rise this year.
The automaker is planning to launch as many as 25 new or revamped models this year to replace about 70 percent of its U.S. lineup by the end of 2013. In Chinese market, the company and its JV partners began to introduce more than 60 new models in 2011, and all of them will be in the market by 2015.
The lukewarm forecast hampered investor confidence as its shares fell 1.96 percent to $30 in pre-market trading. Mr. Ammann assured everyone that the company has good financial discipline and product lineup. It’s up to the company management to execute them and hand the product to customers.
GM said it will increase its marketing efforts significantly this year. The company will also face increased costs in the Chinese and U.S. market associated with the launching and marketing of 25 new vehicles this year. The heightened competition in China is putting pressure on the company’s margins.
GM’s current margin rate is just 7.8 percent. The automaker once again aims to achieve 10 percent margin on earnings before interest in the U.S. market within the next few years. General Motors Company (NYSE:GM) had achieved that level in Q3 of 2011. Reaching that goal again will require controlled manufacturing costs and pricing discipline.
However, some of the gains in the U.S. market will be eroded by lackluster performance in European market, where the auto industry is expected to shrink by 4 percent this year. General Motors Company (NYSE:GM)’s CEO fears that Germany might also be slipping into a recession.