Despite ending the year with disappointing sales results in Europe, General Motors (NYSE:GM) is making this year a building year, one that will “set the stage for enhanced profitability in the coming years,” as North America finance chief Chuck Stevens explained to The Wall Street Journal.
In the last month of 2012, new car sales in the European Union shrank by the greatest amount since October 2010, with the number of new car registrations decreasing 16.3 percent in December to 799,407 vehicles. The figures were only slightly better for the year. Annual car sales volumes in Europe dropped 8.2 percent to 12.05 million vehicles in 2012, according to the European automotive industry association ACEA, and within the euro zone, the numbers were even worse; sales fell 11.3 percent to just under 9 million for the year, according to Reuters’ calculations.
New austerity measures have pushed unemployment to a record high of almost 12 percent and indebted banks have not made automobile loans easy for consumers to secure, creating a problem for the automotive industry. Of all the major manufacturers, General Motors and Ford (NYSE:F) suffered some of the biggest sales drops; both companies saw decreases of 27 percent for the month.
But GM is focused on 2013.
The manufacturer has predicted that its pre-tax sales will increase slightly this year. “Although we see improvement in the U.S. and China there will be a contraction in Europe so there is a pretty limited growth environment,” the company’s Finance chief Dan Ammann said at a presentation on Tuesday in Detroit, reported The Wall Street Journal.
GM started the year with the intention of creating growth for years to come. Within that directive, the automaker has 25 new or refreshed vehicles scheduled for launch and a goal of improving annual margins on earnings to 10 percent. Currently, the company has a margin of approximately 7.8 percent. In order to hit that mark, GM plans to maintain pricing discipline, use global architecture more effectively, and control manufacturing costs.
“We have good financial disciplines in place,” Mr. Ammann said, according to the publication. “Here in North America and around the world we feel we have all the right pieces in places in terms of product and it’s up to us to execute and get that product in the hands of customers.”
As the new year progresses, General Motors will also have a greater portion of its own company in hand. StreetInsider reported on Wednesday that the U.S. Treasury will sell 200 million shares back to the automaker, in a deal valued at $5.5 billion, or $27.50 per share. Although, once the sale is complete, the department will still hold approximately 300 million shares.