USA: Auto makers optimistic in spite of flat growth in US auto industry.

General Motors Corp. hopes to increase its U.S. retail sales in 2007 despite what is expected to be flat growth at best for the U.S. auto industry, Chief Executive Rick Wagoner told reporters on Sunday (January 7) at the USA auto show in Detroit, Michigan. The world's largest automaker -- expected to lose that crown this year to arch rival Toyota Motor Corp. sold 3 million vehicles to U.S. retail customers in 2006. Wagoner said he agreed with assessments the overall 2007 U.S. vehicle market will be flat compared with a year earlier. Almost 16.6 million vehicles were sold in the U.S. market in 2006. Analysts caution that a slower economy and housing market, which could squeeze consumer spending, may well leade to a weaker car market in 2007. But Wagoner said GM remains more optimistic. "We expect a little weaker in the first half of the year, a little stronger in the second half of the year, and auto sales should move in that track as well." GM, which lost $10.6 billion in 2005, is in the middle of a broad restructuring that includes slashing more than 35,000 jobs and closing 12 plants. The automaker is cutting structural costs by $9 billion but faces daunting challenges. As the company heads towards formal contract talks with the United Auto Workers union this year, Wagoner said health care costs and competitiveness will be key issues. He said GM's annual healthcare costs of more than 4 billion U.S.dollars hurts the company's efforts to get into a position where it can generate cash again. "I hope we take advantage of this next round of contracts to address broad-based productivity, competitiveness issues," Wagoner said. "They continue to be health care, they continue to be things like the impact of the jobs bank," he said. The jobs bank allows laid-off workers to get paid nearly their full salary until retirement -- a clause written into the labor contract during GM's profitable years. In 2006, GM negotiated health care concessions with the United Auto Workers union that could save it 1 billion U.S. dollars in annual costs. But contract talks are expected to get very tense in 2007 as the automaker asks for more concessions. But Auto Maker BMW said the last few years have been booming in the United States. "It was a record year, actually it was a record year after record year recently, and that is great for BMW, and I think it shows just how much interest there is in the premium car business here in the United States. We were 3 percent ahead of the market and that was great for us, " said North American BMW CEO Tom Purves." BMW's first retractable hardtop made its debut at the North American International Auto Show. The automaker also showed the Hydrogen 7, a flex-fuel car that runs of gasoline and hydrogen fuel.

ITN Source | January 8, 2007

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