The chief financial officer for General Motors, Chuck Stevens, predicts a “very strong year” for the company in 2017.
“Overall, we expect a more challenging environment across a number of dimensions” in 2017, due to rising interest rates and falling used-car prices, Stevens told investors and analysts.
However, based on lower fuel prices and the improving economy, Stevens said GM expects “we’re going to be in a reasonably constructive industry environment.”
One of the current concerns among auto industry analysts is inventory levels. Stevens said GM plans to reduce them from approximately 98 days at the end of March to around 90 days in June, and expects to lower levels to approximately 70 days by the end of the year.
Stevens believes the company should be able to maintain profit margins of approximately 10 percent, based on a combination of cost-cutting and strong economic indicators.
These statements come on the heels of surprisingly low U.S. new light-vehicle sales figures for the month of March, showing an annualized sales rate of about 16.6 million units. However, Stevens indicated that General Motors still predicts overall industry sales of new light vehicles to reach 17.5 million units this year, following 2016’s record 17.55 million.
Stevens said GM believes that March figures were affected by a mild winter, which resulted in sales being more evenly distributed across the first quarter, in contrast to prior winters with colder weather. Additionally, as many leased vehicles return to the market, the automaker expects its used car prices to come down approximately 7 percent in 2017.
At the same time, overall sales forecasts for 2017 remain quite positive. This week, the National Automobile Dealers Association upheld its U.S. sales forecast of 17.1 million, while Kelley Blue Book and Autotrader predict vehicle sales of between 16.8 million to 17.3 million for 2017, representing a 1 to 4 percent decline from 2016. Forecasts from Edmunds.com are in the same range, at 17.2 million vehicles for this year.