General Motors Co (GM) on Wednesday forecast that its 2015 operating profit will increase from last year due mostly to growth in its two largest auto markets, China and the United States.
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As it moves past a year marred by massive recalls from a defective ignition switch linked to at least 45 deaths, GM said modest growth in global vehicle sales this year would help the No. 1 U.S. automaker post improved results in all of its regions. It also said it remained on track for 2016 targets, including 10 percent profit margins in North America and a return to profits in Europe.
Last year, Mary Barra's first as chief executive officer of the Detroit company, GM dealt with the recall of 2.6 million cars due to the faulty switch that led to numerous probes and lawsuits, as well as an overall increase in total recalls from other problems.
Barra called 2014 "a pivotal year" that GM wants to build on in 2015. She and other executives spoke at a Deutsche Bank conference held in conjunction with the Detroit auto show.
GM, which also affirmed its plan to achieve 9- to 10-percent profit margins by early next decade, will boost its capital spending plans this year by 20 percent to about $9 billion. More than one-quarter of the vehicles GM sells next year will come from new and refreshed designs, rising to almost half in 2019.
GM sees global industry sales rising about 3 percent to 89 million vehicles this year, but heightened competition will allow only moderate increases in its vehicle pricing.
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Chief Financial Officer Chuck Stevens said GM will not have to add to the $2.7 billion in charges from recalls through the first nine months of last year plus the $400 million to $600 million to establish a compensation fund related to the bad switch. He did not say whether any recall-related charges would be taken in the fourth quarter. Results will be announced on Feb. 4.
In its core U.S. market, GM sees flat market share, flat to slight lower vehicle pricing and higher profit margins. It sees improved profits and market share in China even as the growth in that market slows and the company's vehicle pricing declines.
GM still expects its European operation to return to profitability in 2016 for the first time since 1999 as well as increased market share and improved pricing on its vehicles in the region this year.
(Editing by Jeffrey Benkoe)