Arab Today, arab today gm lifts 2016 outlook after banner year of us car sales
Last Updated : GMT 05:39:40
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GM lifts 2016 outlook after banner year of US car sales

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Arab Today, arab today GM lifts 2016 outlook after banner year of US car sales

General Motors has lifted its 2016 earnings forecast and boosted its plan for capital returns to shareholders
Detroit - AFP

General Motors raised its 2016 earnings outlook Wednesday as it follows up a banner year of US sales with major product launches and touted the benefits of hard-won efficiencies.

The biggest US carmaker also hiked its dividend by six percent and lifted its share buyback program by $4 billion to $9 billion in a sign of confidence in its outlook.

The moves come on the heels of booming US auto sales for virtually all carmakers, with GM sales up eight percent to 3.1 million vehicles in 2015.

That strength, as well as continued gains in China, has offset weakness in Europe and South America. After years of losses, company executives said they expect to break even in Europe in 2016, but that South America will remain a troubled market.

The company raised its 2016 earnings per share range by 25 cents to $5.25-$5.75.

GM president Dan Ammann said moves to return capital to shareholders reflect profitability gains because the company "has not been afraid to trade volume for quality earnings."

- 'Smaller but better' -

GM has radically scaled back its business in Russia and other markets where it sees little prospect for long-term growth.

Between 2013 and 2015, GM's share of car sales in the global market has dipped from 11.5 percent to 11.2 percent and revenues have been flat. However, its profit margin has risen from 5.5 percent to 7.0 percent.

"We're happy to be a slightly smaller but much better company," Ammann said.
The strong outlook also reflects the buoyant conditions in GM's home market, where low gasoline prices and an improving economy have translated to soaring car sales.

In 2016, GM will launch in the US the all-electric Chevrolet Bolt as well as refreshed versions of its Chevrolet Malibu and GMC trucks.

Some of the same vehicles will also launch in China, while a refreshed Opel Astra sedan and a full year of sales of the Opel Corsa mini car are also expected to boost results.

GM chief financial officer Chuck Stevens said the company is entering "the heart of our product launch cycle" with the rate of major new vehicles and refreshes picking up in 2016 and staying high through the end of the decade.

GM typically garners higher profits from new and refreshed vehicles compared with models being replaced.

Most automakers see the US market as staying strong in 2016, but with growth likely moderating. GM has said it believes the US market will remain roughly flat with the 2015 sales.

GM chief executive Mary Barra said the company expects the key China market will "be slower growth and it will be more volatile" over the short run as the world's second-biggest economy slows.

However, the company remains bullish on China in the long term, seeing potential for the overall market to rise from 25 million cars per year to 35 million per year.

In Europe, the outlook is for a return to break-even conditions. Through the first three quarters of 2015, GM's operating loss in Europe was $515 million.

"We continue to see fairly aggressive pricing in Europe, but we are seeing a little improvement in volume," Ammann said.

Company officials talked up a $500 million investment in ride-hailing service Lyft, for which it will provide cars for Lyft drivers through short-term rental hubs. The two companies also will share customer data, an increasingly cherished resource as disruptive technology hits all sectors, including autos.

Ammann expects "explosive" growth in ride-sharing, which is seen as a major business in urban areas.

"We think we're at the beginning of that growth engine," he said.  

Shares in GM rose 2.1 percent to $30.94 in morning trade.

 

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