GM Affirms Profit Outlook Despite Softening U.S. Market

General Motors Co. tells analysts it remains confident about its profit forecast for 2017 despite high U.S. inventories of unsold cars and sales growth that slowed to 1% in the first quarter.

GM reiterates that is expects its pretax profits this year will range between $6 and $6.50 per share, compared with $6.12 last year despite a “more challenging” American market, in which interest rates are rising and used-car prices are falling.

Chief Financial Officer Chuck Stevens attributes GM’s optimism in part to the sale of its money-losing Opel operations to PSA Group. He says the deal will avoid a $400 million loss and release $1 billion in capital spending funds that had been earmarked for European products and production.

Stevens suggests that GM’s increased spending on retail incentives is being offset by rising average selling prices as the market shifts from cars to more profitable SUVs and crossover vehicles. He predicts GM will narrow its average days-supply of cars from 90 days to 70 days by December. A 60-day supply is considered normal.

Stevens also predicts that overall passenger vehicle sales in the U.S. will total about 17.5 million units close to last year’s record 17.55 million. He expects an uptick in demand for GM vehicles as new models debut later this year.