GM Optimism Rising After Reporting Solid October Sales

Although voters signaled their impatience with the pace of the U.S. economic recovery in yesterday’s election, General Motors Co. says the slow comeback under way will pick up steam in the automotive sector in the year’s closing months.

The auto maker considers itself uniquely positioned for the November-December finish, given new product launches such as the Chevrolet Cruze compact car.

“In a nutshell, the story we see is a little brighter this month,” says Don Johnson, vice president-U.S. sales at GM.

Johnson points to positive improvements, such as an uptick of 2% in the third-quarter gross domestic product and a 2.6% hike in consumer spending in the same period – both higher growth rates than gains posted in the second quarter.

Research also shows consumers less likely to delay spending, and although the national unemployment rate and consumer confidence remain at low levels, both showed improvements last month. Positive signs are emerging in the housing sector, as well, Johnson says.

“These are signs of a steady recovery, and we do believe they bode well for the auto sector, as pent-up demand will begin to release and speed up the industry’s recovery,” he says, while reporting an 8% uptick in October sales for GM.

But by giving more control over the nation’s direction to the Republicans last night, Americans voiced their displeasure over lackluster job growth under the Democrats.

“With the midterm elections now behind us, and with consumers seeing somewhat more positive economic news, it will be the rate of employment growth that will determine just how fast the recovery progresses,” Johnson says.

Early Chevy Cruze sales pinched by limited availability.

Auto makers have much at stake in the pace of the recovery, given recent investments. GM, Ford Motor Co. and Chrysler Group LLC each have made significant cash outlays this year to increase production – up 21% year-over-year in the last quarter.

Consumer demand has increased in each of the last three months, Johnson notes.

“We expect auto demand to continue to improve,” he says, reiterating GM’s outlook for 11.5 million to 12 million industry light-vehicle sales this year.

GM has not offered a forecast for 2011, but Johnson says the company’s outlook would not be “radically different” from the 13 million light-vehicle market recently predicted by Ford CEO Alan Mulally.

“We expect auto demand to rise,” Johnson adds, emphasizing the auto maker sees no suggestion of a “double-dip” recession coming or a need to escalate incentive spending to spur sales in the last two months of the year.

“The industry overall, because we have our capacity in line, has a much more disciplined approach to the market, and (we) see low risk any one of the manufacturers is going to get into anything like an incentive war,” Johnson says.

GM pins much of its optimism for the remainder of this year on new products such as the Chevy Cruze, Chevy Equinox cross/utility vehicle and new heavy-duty pickups.

The auto maker’s sales in October rose 8% on a daily rate basis to 183,549 units from 176,149 year-ago, according to Ward’s data. The industry saw one fewer sales day last month vs. like-2009.

But the ’11 Cruze, which GM spent millions of dollars developing to give it a stronger offering at the lower end of the market, accounted for just 5,048 sales, or 516 fewer than the less-attractive Cobalt it replaces.

“Cruze will be the game-changer,” Johnson says. “It’s the first month we’ve had any inventory at all. Our expectation is to grow that volume significantly.”

Johnson says about 15,000 Cruze units now are either on dealer lots or in transit, calling it “good availability” that should lead to an improved November-December result for the car.

A greater supply of the Equinox and heavy-duty Silverado pushed Chevy truck sales up 10.6% to 80,393 units in October, and Equinox topped the 100,000-unit mark for the year.

Brisk sales of the LaCrosse sedan and Enclave CUV pushed Buick deliveries up, and the SRX CUV and a rebound in the CTS line at Cadillac sent sales higher at GM’s luxury division. Johnson also reports greater demand for high-performance CTS-V models in the month, up to 16% of the mix from a typical 5%, due to the addition of the coupe version.

GM’s inventories at the close of the month stood at 515,400 vehicles, with 159,000 cars and 106,000 trucks. About 251,000 of the total were CUVs.

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