GM: No change in Europe break-even forecast amid Brexit
General Motors Co. says it is not changing its forecast to break even and return to profitability this year in Europe, amid uncertainty following the United Kingdom’s surprise vote last week to leave the European Union.
“I’ll tell you what I told (CEO and Chairman of GM) Mary Barra: We’re going to let the dust settle,” GM chief economist Mustafa Mohatarem said.
GM will continue to study Brexit implications and could make adjustments to its sales and production plans, Mohatarem said. He said he does not know if GM production or sales in the U.K. will decline, because it’s not clear yet what will happen with the trade environment in the U.K.
Mohatarem also expects another year of record U.S. auto sales in 2016 and said GM is sticking to its previous forecast for 18 million light- and heavy-duty sales. When factoring out about 400,000 heavy-duty sales, GM expects industry light vehicle sales will reach about 17.6 million, eclipsing last year’s 17.47 million record.
U.S. light vehicle sales through May are up 1.2 percent, according to Autodata Corp. June sales will be released Friday by automakers. Analysts are expecting car companies to post strong sales figures for June.
In the U.S., auto sales actually could get a slight lift from Brexit if the Federal Reserve opts not to raise interest rates, Mohatarem said. Lower interest rates will help car sales, he said.
GM is seeking to be profitable in Europe this year for the first time in more than 15 years. The carmaker operates two plants in England, with the majority of vehicles produced at each facility exported. In a statement Friday, GM’s Opel Group, which runs the automaker’s European operations, said in a statement Friday it seeks to have free trade continue in Britain.
Auto stocks on Friday and Monday fell significantly following the U.K.’s vote Thursday to leave the European Union, with GM’s stock falling close to 8 percent. But the stock recovered some since, closing Wednesday at $28.17, up nearly 1.6 percent.
Ford Motor Co. stock closed up 1.3 percent Wednesday to $12.55 a share, while Fiat Chrysler Automobiles NV stock closed at $6 a share, down 1 percent.