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GM's Akerson and Renault/Nissan's Ghosn have gloomy outlooks for 2012

Thanks to the worsening European debt crisis, both the CEOs of General Motors and the Renault/Nissan Alliance are predicting slow sales growth and general uneasiness in the automotive industry for 2012.

Both the CEOs of General Motors and Renault/Nissan are predicting slow economic growth and consumer anxiety in 2012. GM CEO Dan Akerson expects industry-wide light-passenger vehicle sales to be "flattish" next year, while Renault/Nissan CEO Carlos Ghosn said he feels a "very great uncertainty" about next year's automotive sales. Both execs cited the European debt crisis as having a significant impact on their projections, with Akerson saying that General Motors' sales, and the United States economy in general, will be even more adversely affected if Europe can't come to an agreement on how to rein in its out-of-control spending. Nonetheless, Ghosn is standing behind his sales forecasts for Renault, saying that "we already have our order book, and it's full," while Akerson claimed that the new contract with the UAW "preserved our breakeven point, which is critically important," allowing General Motors' books to remain in the black.

The UAW-GM contract rose the General's operating costs by 1 percent, but Akerson says that GM can still be profitable if they only sell 10.5 million cars next year, which is 16 percent below his forecasts. Akerson is evaluating competition from the Japanese manufacturers, who are poised to make a strong comeback after the March earthquake and tsunami forced production to halt and inventories to shrink. General Motors saw their share of the US market rise from 19 percent to 20 percent in the first nine months of 2011, while Toyota dropped from 15.2 percent to 12.5 percent and Honda fell from 10.6 percent to 9 percent. In an effort to jump-start sales growth, both automakers plan to offer significant incentives, and Akerson said he will be prepared to have an incentive battle with the Japanese manufacturers if necessary. But he feels that the Asian manufacturers' incentives won't boost sales in the way that they're hoping for, and he also thinks the continuing strengthening of the yen against the dollar will cause them to be more cautious about doing so as well. But his own models for General Motors' performance in 2012 still largely revolve around retaining current market share and profits rather than significant growth.

The Renault/Nissan Alliance are facing quite different problems: internal dissent. A few months ago, three executives were fired based on suspicions of espionage, which eventually turned out to be misplaced. As a result, audits of the board of directors were carried out, and Ghosn will more closely oversee the board in the future. However, Ghosn said that the decisions put into place before the scandal arose will stay in effect, including the somewhat-meager sales growth predictions based on Renault's increase in European sales of 1.5 percent last month, and the plan to have liquid assets of 500 million euros on hand for various automotive operational costs.

Source: Automotive News