GM warns of tough times ahead

The world's biggest car maker, General Motors, has beaten Wall Street expectations with its latest results, despite chalking up a net loss of $368m.

There is considerable uncertainty regarding the strength of the key automotive markets during the balance of the year and in 2002

Rick Wagoner, GM chief executive

Excluding the cost of closing a plant in Canada and other one-off charges, GM actually turned a profit for the three months to the end of September.

But the car giant warned of tough times ahead, and said profits for the last three months of 2001 would be less than expected.

The firm highlighted a cut in orders from car rental companies, and the increasing cost of consumer incentives, such as "Keep America Rolling", an interest-free credit scheme introduced following the 11 September attacks.

The car maker, which owns Vauxhall and Opel in Europe and Isuzu in Japan, is in the process of cutting about 10% of its workforce in response to the global slowdown in demand for vehicles.

'Considerable uncertainty'

Commenting on the latest results, GM chief executive Rick Wagoner said: "There is considerable uncertainty regarding the strength of the key automotive markets during the balance of the year and in 2002.

"We're buckling down to enhance our cost position while remaining very aggressive in our effort to maximize revenue and grow market share."

America's biggest car companies all reported a big drop in sales following September 11.

But GM appeared to have come off better than most, reporting a sales reduction of just 3% in the immediate aftermath.

It introduced an interest-free finance offer in the US on 20 September, a move soon followed by Ford and DaimlerChrysler, which will now be extended until mid November.

GM shares have consistently outperformed those of its nearest rival, Ford, which has been hit by the Firestone tyre recall scandal.

Global sales slump

A new range of mid-sized sports-utility vehicles, including the Chevrolet Trailblazer, GMC Envoy and Oldsmobile Bravada, and strong sales of pick-up trucks boosted profits, GM said.

But the firm forecast total industry sales in the fourth quarter would fall by about 6% in the US, compared with last year.

Total car industry sales in western and central Europe would be down approximately 5% in the fourth quarter, compared to the same period last year, GM said.

Earlier this week, the company announced plans to cut 2,500 jobs from its Adam Opel unit in the next two years in an effort to return its European operations to profitability.