Investor Alert

June 26, 2017, 7:36 p.m. EDT

General Motors lowers U.S. auto sales forecast

By Mike Colias

General Motors Co. expects industry vehicle sales to fall short of its original forecast for the year, the latest sign of a slowdown in the U.S. auto market after a record run.

GM now expects U.S. light-vehicle sales in the "low" 17-million range, down from an earlier expectation that this year's tally would roughly match the 17.55-million record from last year, finance chief Chuck Stevens told analysts during a conference call Monday.

Mr. Stevens also said U.S. pricing has become "very, very competitive" amid slowing sales during the first several months of the year. But he said incentives have moderated recently, a sign that car makers aren't willing to cut into profitability to maintain market share as demand cools.

"It appears the industry is becoming a bit more rational," Mr. Stevens said.

Industry sales in each month so far this year have fallen from a year earlier. In a note to investors Monday, Barclays analyst Brian Johnson said he expects the seasonally adjusted sales rate to ease to 16.5 million in June. That would mark the fourth straight month that the pace of sales fell below 17 million, the slowest stretch since mid-2014.

But Mr. Johnson agrees that auto makers "may be drawing the line" on big discounts that have helped fuel sales over much of the past year. He said incentives in June were at the lowest levels in about a year. Auto makers also are pulling back on less-profitable sales to rental companies, a tactic long deployed to sustain sales volumes during a market downturn.

Separately, GM raised its estimate for special charges it will incur from the sale of its Opel AG European division, to $5.5 billion, about $1 billion higher than originally expected. Mr. Stevens said heavier costs linked to the consolidation of some vehicle programs under the deal is a primary factor, describing the charges as "largely noncash."

GM announced the deal in March to sell Opel to France's Peugeot for about $2.1 billion, exiting a business that has suffered billions of dollars in losses over nearly two decades. Mr. Stevens said the sale is on track to close by the end of the year.

He said GM will report Opel results as discontinued operations beginning with the auto maker's second-quarter earnings, scheduled for July 25.

GM also said it will tap about $3 billion in short-term debt to help pay for pension-funding obligations that Peugeot will inherit once the deal closes.

Write to Mike Colias at Mike.Colias@wsj.com

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