GM Reports Progress, But Loss Of $1.2 Billion
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General Motors lost $1.2 billion in the third quarter of this year. If that sounds bad, it's all relative. This is GM's first financial progress report since emerging from bankruptcy.
And as Michigan Radio's Tracy Samilton reports, some analysts are saying it could've been much worse.
TRACY SAMILTON: Look, GM is making some cars that people want. Take Margaret Fazini(ph), for instance. The single mother is a brand new GM customer. Now, she straps her toddler into the safety seat in her new Chevy Equinox. She says she likes the gas mileage and how roomy it is.
Ms. MARGARET FAZINI: We looked at a couple different types of vehicles and this was one that we actually liked the most because the backseat moves back and forth to give you more room in the trunk.
SAMILTON: Chevy Equinox sales are good, but the big picture for GM is considerably murkier. The automaker lost $1.2 billion since it emerged from bankruptcy on July 10th. Now, a year earlier GM lost $2.5 billion. The bankruptcy clearly damaged GM, but not as much as some analysts' worst-case scenario. Still, CEO Fritz Henderson is quick to call the loss not satisfactory.
Mr. FRITZ HENDERSON (CEO, General Motors): As I look at it, some progress, some signs of progress, some signs of stability. We have stabilized share in some important markets around the globe, including in the U.S.
SAMILTON: On the plus side, GM's third quarter revenues were up 21 percent from the dismal second quarter. The company is making money in China. But GM has received a staggering amount of government aid. The amount it has committed to pay back is a small fraction of the amount it owes taxpayers. The Treasury Department propped up the company by buying $50 billion of preferred shares in the company. It's an open question whether that stock will ever sell at a high enough price to pay taxpayers back.
But some analysts think just becoming profitable again will be a big enough accomplishment for a company that lost more than three percent of its global market share in the past year. Erich Merkle is president of Autoconomy.com, an auto industry consulting group. He'd be happy to see GM solve its longstanding problem with inconsistent quality from car to car.
Mr. ERICH MERKLE (President, Autoconomy.com): In the past the company has been so large and has had so many divisions that they just can't touch all those models and keep them all competitive at the same time. A smaller GM in many ways is much better.
SAMILTON: Merkle says GM can now focus on making the vehicles that people want. But contrary to conventional wisdom, that doesn't necessarily mean more small cars. Chevy will launch two new small cars next year: the Chevy Cruze and the all-electric Volt. But Americans still like those big, roomy crossovers.
Mr. MERKLE: And in that mix is actually the pick-up truck. But as housing, you know, comes up off the bottom and improves in 2010 and 2011, those pick-up truck sales will start to improve as well.
SAMILTON: GM said today it will start to pay back the $6.7 billion owing the Treasury in December, five years ahead of schedule. GM officials say the next progress report will show a bigger loss, partly due to the expedited payment. After that, the company expects slow month-to-month improvement. And that's just what analysts say to expect, a slow rise in auto sales that eventually lifts GM and other carmakers to a true recovery.
For NPR News, I'm Tracy Samilton in Ann Arbor.
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