General Motors Co.'s new chief financial officer told analysts the automaker remains committed to the low-debt strategy and discipline on vehicle pricing emphasized by his predecessor.
In a dinner meeting with analysts on Thursday, Dan Ammann said GM faced limited impact from the Japan crisis, was increasing its auto credit capabilities, and was reducing its exposure to incentives in the U.S. market, according to research notes from Barclays Capital and J.P. Morgan.
"Dan emphasized fundamental continuity around GM's financial strategy and philosophy with his predecessor," Barclays analyst Brian Johnson said. "Dan plans to continue the low-debt strategy of his predecessor."
Ammann emphasized a renewed discipline on vehicle pricing and incentives, and growth in credit, analysts said. He also cited the limited impact of production cuts caused by the earthquake and tsunami in Japan, and the limited impact of higher gas prices on North American profits, they said.
A GM spokesman was not immediately available to comment on the meeting with analysts.
J.P. Morgan analyst Himashu Patel said Ammann also seemed to imply in discussing upcoming talks with the United Auto Workers union that GM was willing to agree to variable labor cost increases, such as profit-linked bonuses, to avoid any major structural cost increases like pensions and healthcare.
Ammann, a former Morgan Stanley banker, succeeded Chris Liddell as GM's CFO on April 1. Ammann, the automaker's fourth CFO in the last three years, was previously its finance vice president and treasurer.
GM's financial management and accounting systems were singled out for criticism by the Obama administration's autos task force as contributing factors in the company's 2009 collapse.
Liddell was credited with tightening controls on accounting and bringing a new commitment to paying down debt and pension shortfalls in order to build a "fortress balance sheet" that would protect GM during the next downturn.
Ammann said Thursday that while the impact of the Japan crisis is still unfolding, GM has been able to develop alternative sources for parts, analysts said.
But the situation could push vehicle prices higher and allow GM to pull back on incentives as vehicle inventories dwindle, Barclays' Johnson said, adding that Ammann had agreed with that view.
Ammann characterized a fixed dividend payment as inappropriate, and share buybacks were also viewed with some skepticism, said Patel, who sees GM returning cash to shareholders starting as early as 2013.
Patel said more than $20 billion is likely to eventually be returned to shareholders.
Ammann also said GM would build up the lending capability of its GM Financial unit, which it acquired with the purchase of subprime lender AmeriCredit, according to the analysts.
Investors have raised concern about GM's exposure to another downturn in the economy and tighter credit because of its reliance on Ally Bank -- formerly GMAC -- for providing financing to its U.S. dealers.
The analysts quoted Ammann as saying GM would build up the capacity of GM Financial to make loans to dealers to carry vehicle inventories. Amman ruled out an acquisition for that purpose, they said.
Ammann, 38, joined GM in March 2010 and has said he will stay at the company over the long term. He and Liddell are both from New Zealand and have known each other about 20 years.
Prior to GM, Ammann was managing director and head of industrials investment banking at Morgan Stanley, where he was a key adviser to GM during its restructuring.
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