US market puts brakes on GM profits

General Motors, the world’s biggest automotive company, issued a profits warning to investors as it felt the heat of unprecedented competition in its US heartland.

GM said it now expects to post a loss in the first quarter of 2005 after earlier predicting it would end the period at break-even or better, and said profits for the year as a whole would be significantly lower than forecast.

While the company said its operations outside the US, including Europe, remained on track, the American domestic market is proving a major headache for the automotive behemoth.

GM will build about 70,000 fewer vehicles than expected in North America during the first quarter in response to intense competition from foreign manufacturers.

Chief executive Rick Wagoner admitted the company was under pressure to turn around its domestic performance. ‘North America is our biggest business and the key driver of automotive earnings and cash flow — so it’s important that we get this business right,’ he said.