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GM: US is in recession, gas prices affecting sales

GM has said it offered $200 million to help settle an 11-week strike at parts supplier American Axle & Manufacturing. GM has said it offered $200 million to help settle an 11-week strike at parts supplier American Axle & Manufacturing. (Jerry S. Mendoza/Globe Staff)
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Associated Press / May 14, 2008

DETROIT - Conceding that the US auto industry is in a recession and high gas prices are changing which vehicles people buy, General Motors Corp. said yesterday it is shifting its marketing focus to cars from trucks.

Mike DiGiovanni, GM's executive director of global market and industry analysis, said GM in the past has focused its advertising too heavily on trucks, where the company has made most of its money in recent years.

But it's in the process of shifting "to a new plan that's really going to focus on miles per gallon," DiGiovanni said.

He also said GM will roll out 14 new cars and crossover vehicles in the next 18 months, but only one new truck, positioning itself well to catch buyers leaving the pickup and sport utility vehicle markets.

Digiovanni's remarks at a GM conference for bankers and insurance industry officials came after president and chief operating officer Fritz Henderson told the group it's clear the US auto industry is in a recession.

"The US market challenges are formidable. Actually, there's a lot of debate about whether the US is in recession. The US auto industry is definitely in recession," Henderson said.

But Henderson said GM has prepared for it by cutting costs, rolling out new products, and capitalizing on explosive growth in other parts of the world.

Ray Young, the company's chief financial officer, later told the group GM is confident it has adequate liquidity to weather an even weaker 2008.

The company still is predicting a slow recovery in the second half of the year, but if the economy worsens, GM would consider selling noncore assets to generate cash, as well as reprioritizing spending, further cost cutting, and more borrowing, he said.

GM had about $24 billion in available liquidity at the end of March, plus about $7 billion in undrawn credit, Young said. The company should have $18 billion to $20 billion in liquidity and $4 billion to $5 billion in credit lines before a downturn, he said.

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