Can GM Keep It Going?
After their first quarter profit how will GM fair?
On Thursday, I blogged about GM’s first quarter profit this year. They had initially reported a loss of $323 million, but after an accounting change, GM reported a $445 million profit during that time period. This was is a good sign for the struggling company, but does it mean they are back on the right track for good?
Rick Wagoner, Chairman and CEO, calls the first quarter an “important milestone.” However, he is still cautious and maintains that profits are not the only important step needed for the auto maker right now. He is mainly interested in restructuring the company and offering new cars. The redesign of the Saturn brand is a central part of the new plan.
All of this suggests that the company may be back on the right track but there are also negative signs as well. Eric Noble, the President of The CarLab, points out that GM is still heavily dependent on its trucks and SUVs. They make great large vehicles, but they are weak in the mid size and smaller car areas. This could hurt if gas prices drive car buyers to the smaller vehicles.
GM will also lose revenue when the 51% sale of GMAC is complete at the end of this year. They will gain $14 billion from its sale but they will miss out on the steady income it used to provide. Hopefully by the end of the year, when they lose the GMAC revenue, they will be on their way to being profitable without it.
See Also
- Auto Warranties
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