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GENEVA - General Motors Corp Chief Executive Rick Wagoner said escalating costs would mean more industry alliances and mergers but declined to say if the world's largest automaker would bid for rival DaimlerChrysler's struggling Chrysler Group.
Wagoner said the costs of developing the next generation of automobiles, especially
the replacement for the traditional internal combustion engine, meant that the industry would be driven toward deeper collaboration.
"You're going to have to see manufacturers work together in some fashion ... It could be eventually supply agreements. It could be, I suppose, in some cases mergers, if the case is big enough," he said, but he declined comment on Chrysler
"There's nothing we want to say about it," Wagoner told reporters last night on the sidelines of the Geneva auto show.
GM is open to tie-ups with other automakers to develop an all-electric car like the Chevrolet Volt concept that GM unveiled in January, Wagoner said.
"I think it would be a good example where you could say, yes, you could do that," he said.
GM has had some success in past collaborative tie-ups and outright acquisitions, Wagoner said, citing the automaker's decision to buy the assets of failed Korean automaker Daewoo in 2002. "That's worked out great for us," he said.
Wagoner said he thought the global auto industry was on track for its sixth consecutive record year in unit sales, with about 70 million vehicle sales in 2007, driven by growth in developing markets such as China, Russia and Brazil.
When asked, Wagoner said that "should" mean GM's sales would rise beyond the 9 million units it sold in 2006, but declined to say whether that growth in unit sales would translate into record revenue.
Wagoner said he expected the US economy to post growth near 3 per cent this year, with improvement in the second half as the housing market stabilises.
GM is being challenged by Toyota Motor Corp in terms of its global sales this year and could be overtaken in the view of many analysts as the industry's top player.
Wagoner said a "dramatically" undervalued yen was conferring an unfair advantage on Japanese automakers who still export heavily from home.
"Think in terms of 90 to 100 (yen to the US dollar) as the market base of the currency," he said.
The yen has strengthened against the dollar in recent sessions, a trend Wagoner said could accelerate if more investors opt to unwind carry trades in which investors borrow the Japanese currency to take advantage of low yen interest rates and invest the cash elsewhere for greater returns.
"It will be interesting to see ... if the Japanese government sticks to their now-stated position that they don't plan on intervening in the currency markets," he said. "I'm sceptical but would love to be proven wrong."
Wagoner said he believed more European automakers and governments had come around to GM's view that the Japanese currency has been "artificially weak."
GM has delayed filing its fourth-quarter and full-year earnings as it restates results going back several years and waits for its finance arm to complete its accounting.
The company in November sold a 51 per cent stake in General Motors Acceptance Corp for US$14.4 billion ($21.6 billion) to a group led by Cerberus Capital Management LP.
"It's lot of bookeeping in an environment where clearly there's been a lot of pressure on the mortgage market and that hasn't made it any easier," Wagoner told CNBC on Tuesday, referring to GMAC's delay in reporting results.
Lehman Brothers analyst Brian Johnson has said GM may take a charge of almost US$1 billion to cover bad mortgage loans made by Residential Capital, or ResCap, a part of GMAC.
- REUTERS
