GM pins hopes on overseas markets

General Motors Corp, the world's largest automaker, will probably get 75 percent of car and truck sales from outside the United States within a decade, Chief Executive Officer Rick Wagoner said.



The Detroit-based automaker plans to push sales in the fastest-growing markets as demand in the US stagnates, Wagoner said. In the third quarter of last year, 58 percent of GM's sales came from outside its home market. GM relied on the US for most of its volume as recently as 2004.



After reducing costs by $9 billion over the past two years and agreeing to a money-saving labor contract in October, Wagoner said his company has the cash and momentum to keep pace with global competitors, led by Toyota Motor Corp. The Japanese carmaker is threatening to end GM's 76-year reign as the industry's biggest company.



"I don't concede anything at all," said Wagoner. "GM has very aggressive growth plans in 2008, particularly if you look at markets like China, India, Brazil and Russia."



Preliminary results indicate GM set 2007 sales records in Europe, Asia and other non-North American markets, Wagoner said, while US volume fell for the eighth straight year. GM lost $38 billion through September. Profits overseas weren't enough to overcome losses at home and a $39 billion third-quarter deficit due mostly to a writedown of the value of future tax benefits.



GM shares are at a 20-month low of $23.65 after a 19 percent decline in 2007. Investors aren't giving the automaker enough credit for tapping "explosive" growth in China and Russia, where GM outsells Toyota, Wagoner said.



GM kept its lead over Toyota globally through September with 7.06 million sales, for a margin of 10,000. At the end of the first half, Toyota, maker of the Camry sedan, led by 39,000 vehicles. Year-end totals will be announced this month.



Wagoner said his plan to end losses in North America is about 50 percent to 60 percent complete. Some actions, such as the new labor agreement, haven't yet contributed to reduced costs. Wagoner plans to cut fixed expenses to 25 percent of revenue by 2010 from about 34 percent in 2005.



"Maybe the actions are a little farther along, but the results I don't think are that far along," Wagoner said. "From that perspective, we've got plenty more to do."



Under last year's agreement with the United Auto Workers, the union agreed to pay future union retiree healthcare costs and accept 50 percent lower wages and benefits for new workers.



In exchange for shedding $47 billion in union retiree costs, GM promised to keep building more cars and trucks in the US. The healthcare fund won't create savings until 2010.



GM is banking on redesigned models such as the Chevrolet Malibu and Cadillac CTS sedans to help end its US sales decline, he said. GM's US sales fell 6 percent last year, and its market share dropped to 23.7 percent, continuing a decline from its 1962 peak of 51 percent.



"We have a reasonable prospect for picking up some retail market share," he said. The automaker has been trying to reduce low-profit sales to rental-car companies and other fleets.



GM's 8.375 percent note due July 2033 fell 1.6 cents to 77.44 cents on the dollar on January 5, yielding 11 percent, according to Trace, the NASD's bond-price reporting service.



Credit-default swaps on GM debt increased 61 basis points to 841 basis points to end last week, according to CMA Datavision in London.