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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Reader Comments (Page 1 of 1)
Bob Lutz @ May 14th 2006 2:55PM
I hope not. I want GM to die out
Roger @ May 14th 2006 3:28PM
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).
Name that loon @ May 14th 2006 3:34PM
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.
mark @ May 14th 2006 3:34PM
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..
Razib Ahmed @ May 14th 2006 4:23PM
Genreral Motors should take the Asian market more seriously. In APril the company sold 3,662 units which is 1600 better than April 2005. India is proving to be a good source of income for SUzuki with its compact cars for $4500 and now TATA motors is trying to make a car for $2000 (http://www.southasiabiz.com/2006/05/battle_of_cheap_cars_in_india.html). I wish that GM could do something in this market segment.
Mal Fuller @ May 14th 2006 4:39PM
Let's see. GM thought it lost $323,000,000 in the first quarter but later "discovered" they'd instead made $445,000,000! That's only a $768 million dollar error! With accounting this screwed up it's no wonder that GM management doesn't know what they're doing or should do.
Roger @ May 14th 2006 7:37PM
Mark, listen.
Where will GM get the money tyo build and develop these "cars that people want"?
Will the UAW allow them to cut back on producing the current cars to use the money to develop new ones?
Or will they force GM to have to keep hundreds of thousands of employees on payroll?
whofan @ May 14th 2006 8:09PM
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!
david @ May 14th 2006 10:06PM
#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.
Stephen @ May 14th 2006 11:11PM
As much as i agree that GM management is largely to blame for their problems, i get the feeling that the UAW has hampered GM ability to adapt to changing markets and buyer preference.
In general i think that unions have outlived thier usefullness and as much unions have been critical in workers rights and workplace saftey now that we have all this there not needed anymore and are trying to cling to an outdated way of thinking and doing business the same way GM did when japanese cars first started comming to North America.
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.
But hey thats just my opinion i could be wrong
Jeff @ May 15th 2006 1:40AM
#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.
Gundar @ May 15th 2006 6:30AM
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.
John @ May 15th 2006 11:09AM
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.
Sarge @ May 15th 2006 12:00PM
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!
Takeo @ May 15th 2006 12:52PM
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.
michael jeffrey @ May 15th 2006 2:00PM
if the inventory at the local dealer is any indication, they are either preparing for an extended strike,or if that is averted there is going to be one hell of a toe tag sale coming up!Apparently GM counts deliveries to the dealer as sales, and if the local situation is repeated all over North America then the General has hundred of thousand of "not really sold" vehicles in it's inventory
david @ May 15th 2006 7:40PM
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.