DETROIT -- General Motors told analysts Tuesday it expects earnings to rise 8-9 percent in 2017 and that it will buy back an additional $5 billion worth of its own shares.
The automaker apparently sees clear sailing ahead in North America, even after Americans bought a record number of new vehicles in 2016, breaking 2015's record. Interest rates are beginning to rise, delinquencies among higher-risk auto loans are increasing and there will be more vehicles coming off leases, exerting downward pressure on used-car prices.
GM said it expects to earn $6 to $6.50 per share for all of 2017. It has guided to a range of $5.50 to $6 a share for all of 2016. The automaker will report its final 2016 earnings on Feb. 7.
GM CEO Mary Barra told analysts the company will generate about $6 billion in automotive free cash flow.
GM shares spiked immediately after the forecast went public, reaching as high as $38.16, a new 52-week high, before retreating in the final hours to close at $37.34, a still-robust 3.7 percent increase from Monday.
The expansion of GM's share repurchase is the second step since an initial $5 billion buyback program launched in early 2015 in response to pressure from a group of large investors who argued the stock was undervalued. The company added $4 billion to the buyback program last year, and now the goal is to buy back $14 billion.
"We've generated consistently strong results the last few years by delivering great vehicles, growing revenue and driving efficiencies while at the same time establishing a leading position in shaping the future of transportation," Barra said in a statement.
Barra, GM President Dan Ammann and Chief Financial Officer Chuck Stevens presented the outlook during the Deutsche Bank 2017 Global Auto Industry Conference in Detroit.
The bullish outlook also is based on a new goal of cutting costs by $6.5 billion by the end of 2018 from a base set in October 2015. That increases the goal from a prior target of $5.5 billion. Through the end of 2016, GM has cut costs by $4 billion.
The bulk of the 2017 profit, as in years past, will be generated in North America and China, improvement in South America, where the Brazilian economy has been weak for several years, and a series of new vehicles to be introduced over the next four years.
Barra continued to deflect questions about the risk from uncertainty about trade policy that President-elect Donald Trump has created by threatening several companies, including GM, Ford and Toyota, with imposing tariffs on vehicles made in Mexico and sold in the U.S.
"Our business is very complex from a supply chain perspective, high capital investments and long lead times," Barra said. "We look forward to having the conversation with the new administration and the new president to help them understand how many jobs we already have created in the U.S.
"Additionally we've increased out IT resources by 11,000 jobs in this country."
Barra said Cruise Automation, the San Francisco startup GM bought in the spring of 2016, has begun shuttling some of its employees between their homes and work in automated Chevrolet Bolt EVs equipped with the technology Cruise developed.
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