General Motors Corp. Chief Executive G. Richard Wagoner agrees with the industry consensus that U.S. vehicle sales probably will drop 5% from this year's record high. But if things suddenly should go south in a hurry, he says GM has a cash cushion of $13 billion to $13.5 billion to hold it over.

“I think our financial situation is pretty robust,” he says in a recent interview with Ward's Automotive Reports, although he acknowledges GM's earnings need to be better. Even so, “the latest downturn scenario suggests we should come through pretty well,” he adds. “The key is that we've cut out a lot of structural costs and we've got some long-term obligations funded, such as pensions.”

Like everyone else in the U.S., GM faces the specter of slowing sales, rising incentive costs and tough new competition from foreign nameplates in lucrative light truck segments during the coming year. But GM also faces the same demons next year that have been plaguing it every year for the last two decades: lackluster products and shrinking U.S. market share. GM's inability to hit its market share projections has become so frustrating that Mr. Wagoner has established a new rule against making public projections.

Mr. Wagoner also tells Ward's:

  • GM — like its competitors — is trying to shift consumers back to buying vehicles instead of leasing them after getting burned by overestimating lease-car residual values.

  • He hasn't lost faith in GM's controversial “brand management” philosophy, even though it so far hasn't helped to boost market share. “In itself, it won't make us successful, but it can help make us successful with the right products.”