Friday, Aug 26, 2016
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Automotive

Head of GM defends rebates

Incentives boosted 1st-quarter sales, but stock fell

NEW YORK -- Dan Akerson, General Motors Co. chief executive officer, said he doesn't regret the company's decision to increase spending on rebates and other deals this year even though it has contributed to the company's tumbling stock price.

GM surprised the industry -- and Wall Street -- when it raised discounts by $400 a vehicle in January and February. Most automakers didn't raise them because demand for new vehicles has been rising in line with supply.

"I think we're in pretty good shape," Mr. Akerson said Tuesday.

The increased incentives helped GM sell 100,000 more cars in the first quarter than it did in the same period last year, he said, and it caught GM's competition off-guard.

GM pulled back on its incentives in March, spending $600 to $800 a vehicle less on the deals. But it was too late for some investors, who shied away from the company's stock because higher rebates cut into profits.

GM's stock closed at $29.59 Tuesday. It opened the year at $37.32 but has fallen 21 percent since.

That could hurt the government's effort to recoup the $50 billion it gave GM to survive. The government got back $13.5 billion from the sale of some of its shares in November's initial public offering. But to break even, it needs to sell its remaining shares for $53 each. It still owns a 26.5 percent stake -- about 500 million shares -- in GM.

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