GM expects to miss target

General Motors yesterday warned that it might miss its $2.5bn (£1.6bn) profit target for 2003 because of the faltering economic outlook.

The warning weighed on Wall Street, which looks to the auto-manufacturer as an indicator of consumer confidence. Its shares were more than 3% lower at about $35 by mid-morning.

The Detroit company, which has managed a strong turnaround over the past two years, declined to set a new forecast for the full year. The firm said it would miss expectations for the second quarter and full year targets were in doubt, "given the uncertain economic conditions".

March sales fell by 3.2% and the company has lowered its estimate for total US industry sales from 16.5m units to 16m.

"The GM numbers were taken on board badly because right now people need reassurance that data and corporate earnings are looking up after the Iraq conflict. GM's goes against that grain," said one trader. Profits from thes North American auto opera tion fell from $654m in the first quarter of last year to $548m. Despite its recovery in recent years, GM is feeling the intense competition from Japanese and domestic rivals. Its US market share fell to 26.6% in the first quarter, down from 28.2% a year earlier.

Despite the gloom, GM's first quarter profits of $1.48bn, up from $228m, comfortably beat Wall Street expectations. Excluding the results of the satellite television business Hughes Electronics and a one-off gain of $505m from the sale of its defence arm, GM earned $1bn.