GM Shows Signs Of Life After Bailout

General Motors had some good news this week for a change. For now, the troubled automaker won't be going to Congress for more money. But industry analysts warn that it's too early to call it a comeback.

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ALEX COHEN, host:

This is Day to Day. I'm Alex Cohen.

MADELEINE BRAND, host:

I'm Madeleine Brand. In a few minutes, newspapers are going out of business - what that means for newspaper cartoonists.

COHEN: First, though, General Motors surprised everyone this week when it said its prospects are improving. The automaker insists it can get through March without more money from the federal government. Analysts say it's not yet time to celebrate GM's recovery. From Detroit, Celeste Headlee has more.

CELESTE HEADLEE: The question on many people's minds is, what does it mean that GM doesn't need more money from the government right now?

Ms. MICHELLE KREBS (Senior Editor, Edmund's Auto Observer.com): I wouldn't say that it means, let's break out the champagne, that everything is well.

HEADLEE: Michelle Krebs is the senior editor for Edmund's Auto Observer.com. She says no matter how many cuts GM makes, it won't recover until cars start moving off lots again.

Ms. KREBS: The big issue continues to be car sales, which were terrible in February. And until they get the market moving again, the future is not that bright.

HEADLEE: But she says GM has made some significant changes, and this may be a sign that restructuring efforts are working. Paul Eisenstein of TheDetroitBureau.com is also cautiously hopeful.

Mr. PAUL EISENSTEIN (TheDetroitBureau.com): On the surface, at least, one has to say it's a good sign if the company was able to go without getting another rush of billions of dollars of aid in this bad economy.

HEADLEE: But analysts say this could be the equivalent of GM's spraying new-car scent on its balance sheets. Early this month, auditors question whether or not GM could survive without declaring bankruptcy. And some Republicans in Congress have asked the U.S. Treasury to force Chapter 11 on the struggling automaker.

Mr. EISENSTEIN: Certainly, GM has to try to dispel those who believe that there is no way to save the company.

HEADLEE: GM could also be putting on a brave face to convince lawmakers that the company can turn it around. The March 31st deadline is looming, when a report is due to Congress defending the loans GM has already received, and giving good cause for the government to invest further in the company. Krebs says it's a busy season for politics.

Ms. KREBS: There's a lot of PR in all of this. GM wants to desperately show the government and the American public that it is making progress in terms of restructuring, and so that would make it more desirable for them to receive more loans when they need them.

HEADLEE: But GM has made some sizable cuts recently to its workforce and benefits, and has renegotiated agreements with banks. More importantly, Eisenstein says GM is looking to shed Saturn, Saab, Hummer, and most of Pontiac.

Mr. EISENSTEIN: GM has been staring down its critics for years, saying no, we don't need to drop divisions, even if they're really just a drag on our momentum.

HEADLEE: Michelle Krebs also says that dumping some of its brands will help buoy the company over troubled waters.

Ms. KREBS: I mean, if you think Mother Hubbard feeding a lot of mouths, that's kind of what all those brands were for General Motors.

HEADLEE: So cutting brands is a good thing, analysts say, and so is slashing jobs and reducing benefits. All of the Big Three are making these kinds of changes. But some wonder if they're cutting too deep. Eisenstein says that's especially worrying with Chrysler.

Mr. EISENSTEIN: Some of my sources say that this company is in such a knife-happy mood right now that they are all but eliminating their ability to actually develop, take from concept production, the new cars they need to compete.

HEADLEE: And the companies won't be able to cut their way to profitability. GM will certainly not be successful until it can sell the brands it still has. And Eisenstein says no cars are selling right now. Even Toyota is posting record losses, and asking the Japanese government for financial assistance.

Mr. EISENSTEIN: This is not a good situation right now for any manufacturer building cars anywhere in the world.

HEADLEE: But he says GM's new message to the U.S. government seems clear.

Mr. EISENSTEIN: We can save ourselves. We need a little bit of help in the short run because the economic situation is so out of control and so beyond our control. But with a little bit of help, doesn't this demonstrate that we can survive?

HEADLEE: And Michelle Krebs says it's pretty safe for the American public to believe that message, and to buy GM cars.

Ms KREBS: You know, there are lots of questions by consumers. Should I buy a car from them? Will they be around? And my argument would be yes, they will be.

HEADLEE: But short-term survivability for GM is still a question. And even if GM doesn't need billions in aid this month, they could be driving back to Washington in April, hat in hand. Celeste Headlee, NPR News Detroit.

COHEN: More coming up on Day to Day from NPR News.

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