(Reuters) – Top executives of General Motors and Ford gave upbeat outlooks for the U.S. auto market and their profit plans on Tuesday, saying U.S. consumer demand remains strong.
GM Chief Financial Officer Paul Jacobson said auto sales in March were “looking really strong” after a strong February as GM incentives come down.
“All in all, a really, really good start to the year and we feel good about where we’re trending,” Jacobson said. GM had assumed a 2-2.5% price reduction but this year GM has not seen any drop in prices. “Demand is actually hanging in pretty strong,” Jacobson said.
Ford Chief Financial Officer John Lawler reaffirmed the company’s outlook for annual core profit of between $10 billion and $12 billion. “Things are looking pretty good” in the U.S. market, and prices are holding up better than expected, he said.
However, demand for electric vehicles is “much lower than the industry expected,” Lawler said. Ford has cut production plans for its EV and will “match capacity with demand,” he said.
Lawler said Ford has a “skunk works” team working on a new, low-cost EV architecture that could be the foundation for sedans, SUVs and trucks, delivering the interior space of a mid-sized Explorer SUV in a vehicle that is the size of a smaller Escape on the outside.
The low-cost EV program, designed to compete with China’s BYD and Tesla, is essential to reversing losses in Ford’s EV unit expected at $5 billion this year, he said.
Ford’s EV business must eventually “stand on its own” and turn a profit to win more long-term investment, Lawler said.
GM shares rose 1.3%, while Ford fell 2%.
Legacy U.S. automakers, which rely heavily on sales of large trucks and SUVs, have been bogged down by higher expenses related to electrifying their lineups and bumpy demand for battery electric vehicles.
GM also expects to achieve its annualized production rate target of between 200,000 and 300,000 EVs by the end of the year.
GM has also had to navigate expenses and headwinds related to its Cruise self-driving unit. “We still see a lot of promise in that business,” Jacobson said.
At Ford, Lawler said the automaker will rely on demand for its hybrid models “as an important part of that bridge over the next five years.”
In contrast, Chrysler parent Stellantis said earlier this month it would lay off about 400 U.S. salaried workers as it seeks to cut costs, boost efficiency and ramp up its electric-vehicle production plans.
Reporting by David Shepardson in New York, Joseph White in Detroit and Nathan Gomes in Bengaluru; Editing by Pooja Desai, Keith Weir and Nick Zieminski
