If any doubts were lingering about who was winning the war among the Big Three automakers,
has dispelled them.
Evidence has been mounting for weeks that GM is sprinting ahead of rivals
for market share. Now GM is raising its earnings guidance, while the other two are struggling to get in position to secure profits.
GM raised its earnings targets for the fourth quarter and 2002. Meanwhile, DaimlerChrysler indicated that its Chrysler group will have trouble breaking even in 2002 amid a slump in truck sales and higher marketing costs. Ford, which expects to post a loss for the latest fiscal year, is set to announce a massive restructuring program Friday morning that could entail writedowns of as much as $4 billion and up to 10,000 job cuts over the next two years.
Shares of all three automakers were falling. GM's shares were lately off 14 cents to $50.10, while Ford was dropping 97 cents, or 6%, to $15.34. DaimlerChrysler was losing $1.25, or 3%, to $41.96.
GM said it would report earnings of 60 cents a share for the fourth quarter, 10 cents above its earlier predictions, and the company hiked its earnings targets for 2002 to $3 a share, well ahead of analysts' estimates of $1.93. GM Vice Chairman and CFO John Devine told analysts in Detroit that the 2002 targets would require deep cost-cutting but were "realistic."
Fourth-quarter results were better than expected because of higher sales resulting from the interest-free financing incentives GM began offering after the terrorist attacks of Sept. 11. GM has been gaining market share, and strong auto sales offset heavy marketing costs and the devaluation of Argentina's currency, the company said. On Jan. 1, GM discontinued its 0% financing program and started offering $2,002 cash rebates on most cars and trucks.
The incentives programs have been tough on GM's rivals.
Chrysler is in the second year of a three-year restructuring in which it plans to slash 20% of the U.S. unit's workforce and idle six plants, but executives speaking at a Detroit auto show said their initial plans didn't forecast such a steep economic downturn in the U.S. As for Ford, various reports say the company is preparing to cut several thousand jobs and close plants, just months after the automaker slashed its dividend and ousted CEO Jacques Nasser.