WILMINGTON, Delaware - The world's largest car maker, General Motors, faces a tough US market and record-high commodity costs, despite progress made under a sweeping restructuring, the company's chairman has warned.
Chairman and chief executive Rick Wagoner was speaking at General Motors' annual meeting.
Wagoner told investors higher prices on
raw materials - everything from oil to steel and aluminium - made it "very difficult" to meet GM's goal of cutting US$1 billion ($1.6 billion) from supply costs this year.
But he said General Motors (GM), which lost US$10.6 billion in 2005, was still on track to cut US$7 billion in structural costs in North America by the end of the year.
GM is closing 12 plants and eliminating 30,000 jobs as it looks to adjust to a slide in its US market share, now just above 25 per cent and down almost eight percentage points over the past decade.
Over the objection of GM's board, shareholders at the meeting passed a pair of non-binding proposals, which would require GM directors be elected by a majority vote and allow investors to split votes unequally among nominees.
Wagoner said GM's board would take up the question of reforming the election procedures of directors, but he declined to say when or if the measure would be enacted.
GM shares have gained 30 per cent since the start of the year as Wall Street pessimism over the company's near-term outlook eased, but are still down about 17 per cent from a year ago when Wagoner first announced GM's cost-cutting plan.
At the meeting, on Tuesday local time, Wagoner said GM was focused on the successful conclusion of a buy-out programme offered to its unionised work force and closing the sale of a majority stake in its finance arm, GMAC.
He also said GM was still in discussions with former subsidiary Delphi Corp. and the unions that represent workers at the bankrupt auto parts supplier. The talks are aimed at achieving a settlement that would avoid a labour disruption.
GM's new vehicle launches, which accounted for 20 per cent of sales last year, are running at 30 per cent this year and are on track to hit 40 per cent next year, Wagoner said.
GM has been under investigation by the US Securities and Exchange Commission for its accounting practices. Wagoner said the company was cooperating with the SEC and was taking steps to strengthen internal controls.
GM shares closed down 3 per cent, to US$25.25, on the New York Stock Exchange on Tuesday.
- REUTERS
