GM shifts marketing away from trucks

GM plans to focus marketing on fuel efficiency.

DETROIT (AP) — Conceding that the U.S. auto industry is in a recession and high gas prices are changing which vehicles people buy, General Motors Corp. said Tuesday it is shifting its marketing to focus more on cars and less on trucks.

Mike DiGiovanni, GM’s executive director of global market and industry analysis, said GM in the past has focused its advertising too heavily on trucks, where the company has made most of its money in recent years.

But it’s in the process of shifting “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, positioning itself well to catch buyers leaving the pickup truck and sport-utility vehicle markets.

DiGiovanni’s remarks at a GM conference for bankers and insurance industry officials came after President and Chief Operating Officer Fritz Henderson told the group that it’s clear the U.S. auto industry is in a recession.

“The U.S. market challenges are formidable. Actually, there’s a lot of debate about whether the U.S. is in recession. The U.S. auto industry is definitely in recession,” Henderson told the group.

But Henderson said GM has prepared for it by cutting costs, rolling out new products and capitalizing on explosive growth in other parts of the world.

Ray Young, the company’s chief financial officer, later told the group that GM is confident it has adequate liquidity to weather an even weaker 2008.

The company still is predicting a slow recovery in the second half of the year, but if the economy worsens, GM would consider selling noncore assets to generate cash, as well as re-prioritizing capital spending, further cost cutting, and more borrowing, he told the group.

GM had about $24 billion in available liquidity at the end of March, plus about $7 billion in undrawn credit, Young said. The company should have $18 billion to $20 billion in liquidity and $4 billion to $5 billion in credit lines before a downturn, he said.

Henderson told the group that first-quarter U.S. sales were about what GM had expected, but a drop in April surprised the company. GM, he said, has been selling under previous years’ trends for the past three years in the U.S.

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 SUVs. That’s still higher than Ford Motor Co., which is forecasting 15 million.

Henderson 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.

Some industry analysts have predicted sales of below 15 million, a 14-year low.