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GM Blames Weak Sales as Its First-Quarter Net Falls 23%

April 24, 1987|JAMES RISEN | Times Staff Writer

General Motors reported a steep drop in earnings for the first quarter as its net income fell to $922.5 million, down 23.1% from the same period last year, when the world's largest industrial corporation earned nearly $1.2 billion.

The first-quarter results were slightly higher than had been expected by industry analysts, whose more pessimistic forecasts had ranged between $500 million and $800 million.

GM blamed the first-quarter decline on weak car sales in North America and around the world. Its worldwide vehicle sales fell 10% from last year's first quarter, and the company noted that the erosion of its U.S. market share forced it to curtail domestic production at several major assembly plants. At the same time, the company had to offer costly incentive programs during the first quarter, to avert an even bigger drop in sales.

In response, GM said it is "accelerating" its efforts to cut employment levels and phase out its "uncompetitive or obsolete" parts plants.

GM, which last year announced plans to close 11 major manufacturing plants, has been widely expected to disclose another round of closings of components plants as the firm tries to reduce its fixed costs--now the highest in the domestic auto industry.

GM also reported Thursday that its worldwide employment fell to an average of 847,000 during the quarter, down 6% from the 901,000 average in the first quarter of 1986.

Meanwhile, GM Chairman Roger B. Smith and President F. James McDonald said in a statement that the rising value of the Japanese yen against the dollar--which has forced Japanese auto makers to raise their prices in the United States--has ironically presented a new challenge to cut production costs at GM.

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