General Motors Corp. on Thursday cut its 2009 industrywide U.S. sales forecast to 10.5 million vehicles, citing continued uncertainty about when the market for new cars might recover.
While asking Congress for $18 billion in loans last month, the Detroit automaker said it expected industrywide sales of about 12 million for the year, with 10.5 million seen as a worst-case scenario for the industry.
U.S sales fell to 13.2 million in 2008, down 18 percent from a year earlier as poor consumer confidence and tight credit kept buyers away. Many analysts have been predicting sales of 10.5 million to 11.5 million in 2009.
"What we're trying to do here is be very conservative about our assumptions," GM President and Chief Operating Officer Fritz Henderson said at a Deutsche Bank analysts conference in Detroit that was webcast.
The Treasury Department allocated $13.4 billion in loans to GM last month. The company received $4 billion at the end of December. It is supposed to get another $5.4 billion Friday and could get the remaining $4 billion in February if Congress releases more money from its $700 billion financial bailout.
Earlier this week, Henderson told reporters that GM's worst-case scenario would require more than the $13.4 billion the Treasury Department already allocated.
The company on Thursday also cut its industry sales expectations for the next three years. Henderson said that while sales will increase each year, they still won't be back to where they were in the eight or nine year period leading up to 2006.
U.S. sales peaked at 17.4 million in 2000, according to Wards AutoInfoBank.
Globally, GM said it expects industry sales in 2009 to total 57.5 million units.
GM said the lower sales outlook will force it to make hard decisions that will result in a stronger viability plan and better position the company for long-term growth.
The company said it will continue revise its plans as market conditions change.
"We are on track to accomplish the requirements of the viability plan," Chief Executive Rick Wagoner said in a written statement. "We know we have a lot of work in front of us, but we are already working closely with many key stakeholders."
Those stakeholders include the United Auto Workers, which must make concessions to reduce labor costs under the federal loan terms, or else the government could recall the loans March 31. GM must also get bondholders to agree to trade a large portion of their debt for stock in the company.