General Motors Corp. has warned in a financial statement that its 2005 earnings will be as much as 80 percent below its prior forecast, because of lower auto sales in North America and stiff price competition.
GM's previous outlook was based on North American vehicle production volume of 1.25 million vehicles, but production schedules have been reduced by about 70,000 vehicles and the pricing environment has been more competitive than expected in North America.
While GM has "significant'' challenges in North America, chairman and chief executive officer Rick Wagoner said that the rest of its automotive businesses and its financing arm GMAC were running in line with, or ahead of, its expectations.
"But North America is our biggest business, and the key driver of automotive earnings and cash flow. So it's important that we get this business right,'' he added.
The world's largest carmaker said it expects to post a first-quarter loss, compared with its prior forecast to break even or post a profit in the quarter.
The automaker said it now sees full-year earnings of about $1 to $2 per share, excluding special items, down from its previous target of $4 to $5 a share.
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