Reuters Business Report
GM Sees Auto Market Falling in 2003
Tuesday October 8, 5:56 am ET
MILAN (Reuters) - The world's biggest carmaker General Motors Corp expects the U.S. vehicle market to shrink next year and the size of the fall could be aggravated by war in Iraq, GM's chief executive officer was quoted as saying on Tuesday.
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"This year we will end up increasing sales and share of the market in the United States which will be close to 17 million vehicles," Rick Wagoner was quoted as saying by Italian newspaper La Repubblica.
"For next year we are aiming at 16.5 to 16.7 million, provided there is a recovery in the middle of the year and not including the impact of war," he was reported as telling journalists in New York.
Most industry experts expect auto sales in the U.S., the world's largest car market, to reach about 17 million units this year, helped by incentive schemes introduced by carmakers last year to support demand amid worries of a protracted economic downturn.
Wagoner said it remained to be seen how a possible attack on Iraq would affect consumer confidence.
"Of course, if the war was short it would manage to clear up the concerns that are clouding the economies and the markets," he said. "But it is a risky line of thought because no one can predict what will happen."
A war in Iraq could hurt a fragile global economic recovery and hit consumer confidence which is one of the main drivers of auto demand, say industry experts. It could also lead to higher oil prices which may further reduce consumers' appetite for cars.
GM would probably see its sales fall next year although it was too early to quantify by how much and the company had not changed its forecasts so far, Wagoner was also quoted as saying.
A spokesman for GM Europe could not immediately confirm the comments.
GM has led the way with incentives despite analysts' worries that they will eat into its profits in the long run.
Separately, Wagoner declined to comment on speculation that struggling Italian carmaker Fiat might seek to bring forward the 2004 start date for an option to sell its remaining 80 percent of loss-making car unit Fiat Auto to GM.
The CEO said the logic behind the acquisition of 20 percent of Fiat Auto in 2000 was "more relevant than ever" and synergies were going particularly well in development of new motors and design of new small cars.
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