GM CEO predicts share gains after falling to 88-year low

‘Biggest Risk’

GM has said it expects to report a loss of $1.5 billion to $1.8 billion in Europe for 2012 after posting losses in the region since 1999 totaling $17.3 billion as of Sept. 30. The automaker said in October that it expects “slightly better” results this year and intends to end losses by 2015.

“The single biggest risk to GM’s success is the continuing losses and management distraction at Opel,” Adam Jonas, an industry analyst with Morgan Stanley, said as the lead author in a note Jan. 7 to investors.

GM wants to improve European results through an alliance with Paris-based PSA Peugeot Citroen and shuttering its plant in Bochum, Germany, in 2016, which would be the first car factory closing in that country since World War II.

While GM and PSA didn’t reach agreement on developing four products together as originally intended, Akerson said today he’s optimistic about the alliance’s progress and expects logistic, purchasing and development savings by mid-decade.

‘Net Positive’

“Somebody asked me a question: What if the French owned more of Peugeot?” Akerson said. “Well, you know, if they own more of Peugeot and they’re still building cars and they want to be as efficient as possible, our alliance is a net positive in their progress, just as it’s a net positive for General Motors. I presume we’ll continue down the same path.”

Even with some down markets, Akerson said, GM’s cash allows it to continue to invest $8 billion annually in product development.

By mid-decade, Akerson said he wants all five of GM’s units to be profitable or breakeven and for margins on adjusted earnings before interest and taxes to be “competitive” with the industry’s best.

“We have to be profitable in everything that we do,” he said. GM posted net income of $9.19 billion in 2011.

GM also is seeking to regain an investment-grade rating this year, Akerson told reporters.

The automaker currently has ratings of BB+ from Standard & Poor’s and Fitch Ratings and Ba1 from Moody’s Investors Service, the highest non investment-grade ratings from the three companies.

GM wants to secure an A debt rating by the middle of this decade and for shares to become “a blue chip investment by mid- to maybe just after mid-decade,” Akerson said. “I want to see the best customer retention in the industry.”

Bloomberg News

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