General Motors forecasts weak sales for 2006

06/28/06 - newratings.com

NEW YORK, June 28 (newratings.com) – The world's largest automaker, General Motors Corp (GM), Tuesday forecasted a decline in its 2006 auto sales in the US on account of higher interest rates and volatile oil prices.

General Motors’ sales chief, Mark LaNeve, said the automaker's June sales would be nowhere close to the level achieved in the same period last year, when the company's sales jumped 47% on account of customers receiving discounts similar to what its employees get for cars. Reuters quoted executives at General Motors as saying that the company would defer from offering massive discounts even if this strategy results in a substantial year-on-year decline in sales. General Motors, which has witnessed an 8% decline in US auto sales over the first five months of the year, aims to reduce its reliance on incentives for boosting its sales. The automaker said that it would, however, launch a "limited-time, zero-percent financing offer" on several of its 2006 models in the upcoming US holiday weekend.

General Motors’ prediction of weak sales during the summer season came a day after the company announced that 35,000 workers had accepted buyout and retirement incentives, allowing it to save $8 billion in annual spending and reduce its workforce two years earlier than scheduled. The auto giant is likely to face increased competition from its Asian rival, Chrysler, which is expected to renew its employee pricing offer in July to clear off its inventory.