GM: Weak Dollar Levels Playing Field

PONTIAC, Mich., Nov 13, 2002; Michael Ellis wrting for Reuters reported that General Motors Corp.Vice Chairman Bob Lutz said on Wednesday the weakening U.S. dollar and better quality vehicles are putting the U.S. automaker on equal footing at home with Japanese and European competitors.

"With the dollar at the current level, we have a much more level playing field," Lutz told reporters at a press briefing.

Lutz said the weaker U.S. dollar will make it more difficult for foreign automakers to grab U.S. market share.

After rising steadily for two years, the dollar has dropped by about 12 percent against the yen and about 19 percent against the euro since a peak in February.

General Motors, Ford Motor Co. and the Chrysler arm of DaimlerChrysler AG appealed to the White House earlier this year to pressure Japan to stop weakening the yen to boost the profits and competitiveness of Japanese automakers.

GM and Ford executives said earlier this year that the weak yen gave Japanese automakers a 30 percent profit advantage over their American competitors. Japanese automakers have disputed that, asserting that their superior products, and not the weak Japanese yen, are behind their U.S. market share gains.

Honda Motor Co. last month cut its full-year profit targets partly due to expectations that the stronger yen will hurt its earnings from North America, the Japanese automaker's largest market.

GM moved into third place earlier this year, behind Toyota and Honda, among multi-brand automakers in J.D. Power and Associates Initial Quality Survey, a key industry quality study. Last week, based on improved quality reports, seven GM vehicles won new recommendations from Consumer Reports, an influential reference for millions of car buyers.

Pointing to GM's better scores, Lutz said the difference in quality between GM, Honda and Toyota Motor Corp. is "negligible."

"I think you're seeing the beginning of the end of clear-cut domination of imports over domestic brands," he said.

However, Lutz added, it will take time to change the public perception of American car quality.

Lutz made the comments at a press briefing for GM's upcoming Pontiac Grand Prix and Chevrolet Malibu Maxx, two out of at least 10 new or restyled mid-size vehicles the automaker plans to roll out by 2006.

"If this multi-billion dollar assault does not provide (U.S. market) share, I'd be seriously surprised and cruelly disappointed," he said.

Lutz said that U.S. vehicle sales for November looked a "little bit below expectations." But he said he was unsure how they would compare to October, when U.S. sales fell to their lowest rate in four years.