• May 14th 2006 at 2:32PM
  • 16
Earlier this week we posted about how General Motors' reported first quarter $323 million loss became a $445 million profit. And this is not by some accounting fluke: analysis of the automaker's finances shows the profit stemmed from its cost-management strategies and higher revenue from sales such as its new Buick Lucerne and Cadillac vehicles. Of course, postponing the addition of its $681 million health care settlement with Delphi to the books didn't hurt either.
But analysts are wary. Eric Noble of The CarLab points out that, outside of its full-sized SUVs, none of GM's vehicles are top-notch. The automaker will lose half its income from its financial arm once the GMAC sale is completed. Finally, a union strike against GM's major parts supplier Delphi would have GM burning through savings within months if not sooner.

But the greatest threat to GM's recovery comes from rising gas prices. Inventory of its new large SUVs is beginning to increase as SUV demand softens. Frederick Henderson, vice-president and CFO of GM forsees a worse situation for the company if normally loyal truck owners migrate en masse to purchasing sedans.

More details can be found at the link.

[Source: Business Week]


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  • 16 Comments
      • 9 Years Ago
      to #2..
      You think that the UAW is the whole reason why GM is hurting? How about the fact that GM refuses to build quality.. refuses to build anything people WANT to buy! Gee, what a concept.. sales are down, and it's because people don't want to buy GM's crap?

      And you come out here and blame the UAW who puts it together? Where did the UAW have anything to do with people's preferences of product? mmmm.. NOTHING! Hilarious that you'd blame the UAW.. What a cheap excuse when management are the ones who made the terrible decisions on what vechicles to produce.. NOT the UAW!

      Toyota on the other hand, as well as the other succeeding companies have LISTENED to what the consumer wants in a vehicle and are making a profit because people are buying them.. Has NOTHING to do with the UAW.. Oh and maybe they needed those unions from unfair management.. anyone heard of some company called DELPHI?
      What's next? you'll claim that GM's loss on healthcare is why they're hurting.. hahaha.. keep coming up with excuses.. it's hilarious..

      Bottom Line: GM is suffering because they refuse to build products people want to buy.. sales suffer because of it.. end of story..
      • 9 Years Ago
      C'mon, it's over already. General Motors is on its death bed, and the sooner it passes from our midst, the better off we'll all be because it will be the ultimate lesson for fat, lazy American executives and their union lackies, who have taken far too much for granted for far too long.

      God bless Toyota. Long live Toyota, the world LEADER in automobile manufacturing.
      • 9 Years Ago
      Eric Nobel doesn't know hiss ass from a hole in the ground. When he makes that kind of statement he shows his ignorance. My opinions are as good as his and IMHO he is a dumb MF'er..... Thank you.
      • 9 Years Ago
      i would like to see all of you toyoda and hunda owners to go to japan and just do a little research on importing a gm or ford to japan. by the time you pay all of the import tarrifs and taxes you have added about twenty percent on the price. gm and ford cannot build factories on japanese soil. fair, eh? let's get rid of the union and see what happens. well, just eliminate the middle class, let there be only the dirt poor, and very rich. fair, eh? when that happens, we may as well dissolve america as we know it and become a territory of mexico. without unions the working class would work for wal-mart wages, and would not be able to afford toyodas. #14, take a good look at four year and older accords in the rust belt. rusted out rear quarter panels, rusted out side panels around the gas filler, rattles fron the dash, and smoke from the exhaust. i work on them, so stop filling us with your smoke! gundar, screw you you commie.
      • 9 Years Ago
      Here go the supposed experts again. If the experts would acutally go out and drive a GM car they would find that their cars are first class automobiles and will match any Import. I will match the chevy impalla to anything on the street. the pontiac g6 is also a pleasant surprise. Wake up America and stop listening to the paid off experts who dont evern own an American product. Buy American and keep America alive and prosperous. Take a close looki at the foreign companies building autos here they are not paying any taxes here they have all the loop holes filled with their excuses.
      • 9 Years Ago
      #10 says: I would like conduct and experiment and get rid of all unions for a year and see if anything changes and if unions are needed anymore.

      I work in a GM plant, what would happen is our
      pay would be cut in half, benefits gone, that might
      take them a week.....would the consumer benefit from
      reduced costs??? NO WAY
      Oh and by the way we only do the work we are told to
      do, the union has no input into product design or
      marketing, which is to bad, maybe they would have more to sell that folks want.
      • 9 Years Ago
      I hope not. I want GM to die out
      • 9 Years Ago
      #2, your an idiot. plain and simple, an idiot. the steel industry went out of business because they refused to modernize, and management and stock holders took the money and ran. and because your too dumb to understand the unions and what they do for the working class man in america, how is it that you know how to fix gm? i suspect you are either a toyoda salesman or an illegal mexican. you are certinly not smart enough to give advice to gm. by the way, were'nt you suppose to cut my grass today? #4, read the blog on toyoda avalon. quality is way down, and read the host of complaints on all their cars. i happen to love my suburban, 73k, no problems, 04 seville sts, 44k no problems. gladly buy a suburban again next year, sts in two years. stylish and very reliable on both counts.
      • 9 Years Ago
      With all the assets GM has sold off for cash any profits are of little comfort.
      What`s going to happen when there is nothing left put the vehicles to sell?
      I agree with Mal, what`s up with all the accounting errors?
      GM may be much better or worse off than thought!
      Sarge
      • 9 Years Ago
      Come on. GM products need major improvement. To say they equal the Japanese automakers is insane. Sit in a 2007 Toyota Camry and sit in the G6 you mention, The crap interior that GM continues to blindly make cannot hold a candle to the Toyota or Honda interiors. I like some of the GM products but they need to re-engineer their interiors and get out of financial problems before I buy one. What happens if they do go belly up? How will current owners be treated at the dealers who may also go under? I am also not here to support overpaid union workers. I pay over $200 a month for health benefits for my family and I have a good job with a graduate level college dregree. Can the UAW actually think they deserve free healthcare for all of its members and expect GM/Ford to make a profit?? Where can I get a $70/hr job with free health benefits for doing 8 hours of mounting a wheel on some lugs?

      Survival of the fitest! GM better make a damm good car at a damm good price or they are going down the toilet and will bring the UAW with them!
      • 9 Years Ago
      John, are you on Crack? I've driven both the Impala and Malibu ( Both brand new rentals) and in NO WAY do they compare favorably to my 5 year old Accord. The interiors are atrocious, as well as the design of the cockpit controls, handling is numb, engines are rough. The gas milage is roughly comperable, so that's good. But my overriding impression was "cheap" not inexpensive, "cheap" i.e. poor quality, not much effort in design. Granted the newer GM cars are better, but it still can't touch comperable Honda offerings.
      • 9 Years Ago
      Question is:

      Will UAW rules allow GM to reduce truck production and spend the extra money to beef up their more fuel-efficient cars unitl trucks go back up again?
      Or will they keep up their egregious and obstructionist demands on a dying company?

      Lower production will keep the prices of the SUVs up, and allow for higher profits (no incentives) as well as avoid a glut.
      Will it happen?
      Stay tuned!

      GM needs to be spending cash on its vehicles. SO far, every penny earned from every sale is beign funneled into the greedy mouths of that money-thirsty UAW.
      GM--and the economy--would be much better off if the company were allowed to trim its workforce (releasing the excess workers to fill other posts in the growing economy).

      Time for a showdown.
      The UAW has been nothing but bad for GM for 40 years. Will it go away? Or will the US auto industry go the way of the steel industry (also thanks to unions).
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