Detroit (AP) -- The U.S. auto industry is in a recession, General Motors Corp. President and Chief Operating Officer Fritz Henderson said Tuesday.
The automaker's No. 2 executive said GM is selling below trends for the third straight year.
He blamed the sales drop on the troubled housing market, tight credit and higher gasoline prices that are sending consumers from trucks to cars at a rate much faster than the company has ever seen.
But Henderson told a conference of banking and insurance industry officials in Warren that it has cut costs and rolled out new products. GM also is seeing sales growth in emerging markets.
He also said the first quarter was about in line with GM's expectations, but April's sales drop surprised the company. He said GM sees more downside risk than upside opportunity for the remainder of 2008.
The Detroit-based automaker cut its industrywide U.S. sales outlook for 2008 to between 15.3 million and 15.5 million light vehicles from 16 million at the beginning of the year, largely due to plummeting sales of trucks and sport utility vehicles. That's still higher than Ford Motor Co., which is forecasting 15 million.
Some industry analysts have gone below 15 million, a 14-year low.
Henderson said the 11-week strike at parts supplier American Axle and Manufacturing Holdings Inc. has had only a minimal effect on the company's retail sales, largely because it had built up a large inventory of pickup trucks and sport utility vehicles at a time when the market shifted to smaller vehicles.
American Axle makes axles, drive shafts and stabilizer bars mainly for GM's larger vehicles.
Henderson said the strike cost GM $800 million in earnings before taxes in the first quarter, and he said the company agreed to American Axle's request to kick in $200 million to help end the work stoppage by the United Auto Workers.
"We agreed to do that because we think it would be the most helpful thing we could do'' to end the strike, Henderson said. "We're working hard to not be involved in those day-to-day negotiations.''
Mike DiGiovanni, GM's executive director of global market and industry analysis, told the conference the economy will rebound in the second half of the year but the pace would be sluggish.
"We're starting to think that perhaps the trough of this downturn is going to occur in the second quarter,'' he said.
DiGiovanni said the threat of a huge credit crunch has passed, and he predicted home prices likely are to fall further. Home construction, which has a big impact on pickup truck sales, may be near the bottom of a slump, and the rate of decline is slowing, he said.
"I guarantee you pickup sales will come back,'' he said.
GM in the past has focused its advertising too heavily on trucks, but is in the process of shifting that ``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.
GM shares fell 36 cents, or 1.7 percent, to $20.40, in morning trading.
Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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