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GM reports February sales today -- expect U.S. sales to be 'weak'

General Motors (NYSE: GM) and other car makers will be reporting February car and truck sales throughout the day. GM's COO said February sales be "weak" in the U.S. with levels not seen since the early 1980s.

This is interesting in light of the sales projections GM gave the government recently, along with its restructuring plan, as it tried to make the case for more government funds. So, which is it?

According to Edmunds.com, February overall (adjusted) sales decreased by 38.9% from February 2008, but increased 4.6% from January 2009. For GM, Edmunds is forecasting a 46.2% decline in (adjusted) sales from February 2008, but increased 8.4% from January 2009.

GM's CEO Rick Wagoner said the company's cost cuts will make it profitable in a car market of 11.5 million to 12 million cars, in which case it could return to profitability within 24 months and even pay its debt to the government by 2014. With Edmunds.com now projecting an annual rate of 9.3 million cars for 2009, how are any these assumptions realistic, as BusinessWeek asked recently. Indeed, many feel they may not be.

Only last week Federal Reserve Chairman Ben Bernanke said the recession could bottom in 2009 and start recovering after. But then Warren Buffett came out and said he expects the economy will be in shambles throughout 2009 and longer. Now, Dr. Doom, Nouriel Roubini, the most bearish of them all, who originally was forecasting an 18-month recession with a U-shaped recovery is "expecting the downturn to last at least 24 months and possibly 36-months," with perhaps a Japanese-style L-shaped stagnation.

If these predictions are true, U.S. vehicle sales may not recover for quite some time, and the car market could be in for an even worse and longer period than anyone is expecting. For GM it means that even if some markets are seeing a boost in sales, as a result of different government-sponsored incentive programs outside the U.S. (including a 14% year-to-year jump in Germany in February), its core market is still presenting a big challenge that GM will need to overcome to stay viable. The question is if it can, and right now it doesn't look like it.
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Last updated: November 26, 2009: 07:23 PM

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