GM, DaimlerChrysler Show New Signs of Hope
MELISSA BLOCK, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
ROBERT SIEGEL, host:
And I'm Robert Siegel.
There is mixed news - at best - in the earnings reported by two automakers today. General Motors says its loss of a $115 million on the quarter showed how well its turnaround effort is going. And Daimler Chrysler executives acknowledged that growing profits in its Mercedes division were more than offset by a 1.4 loss at Chrysler.
NPR's Jack Speer reports.
JACK SPEER: Generally speaking, CEOs of major corporations don't go on network television to talk up quarterly losses. But that's exactly what GM's Rick Wagoner was doing today. Wagoner made the rounds this morning and told NBC's Today Show he thinks the world's largest car company has turned the corner.
Mr. RICK WAGONER (General Motors): It shows all the tough actions that we've taken with our key constituents - like our unions, our employees, our dealers - are beginning to yield results. We still have more work to do, but I think if you consider that and the exciting new products we're putting out in the market every day, it certainly looks like we're on the right path.
SPEER: However, Wall Street didn't agree. GM shares fell. As analysts pointed out, the numbers would have been far worse if not for a one time tax benefit. Over at Daimler Chrysler's U.S. arm, the situation is no better. Steep losses at Chrysler dragged down the automaker's third quarter results.
University of Maryland economics professor Peter Marichi(ph) says there's also the matter of all those unsold cars and trucks sitting on dealer lots.
Professor PETER MARICHI (University of Maryland): Well, I think the earnings results are being presented better than they are. The reason being is the Big Three have tried to raise prices, especially in September, on the notion that they wouldn't lose a lot of sales. But as it turns out, they have lost a lot of sales and are not accounting for them in their books. They have lots of unsold vehicles that they'll have to sell at a discount.
SPEER: The big reason inventories are so high, gas prices weighed heavily on truck and SUV sales over the summer. Fuel costs have now eased a bit, but Kevin Realy(ph), an analyst at AMR Research says the domestic auto makers plus Chrysler face another problem as they try to regroup.
Mr. KEVIN REALY (AMR Research): Toyota's product cycle on average is about 36 months, where GM and Ford Chrysler have a product life cycle somewhere around four to six years. So they really need to focus in on the efforts and the resources required to start reducing their overall time to market.
SPEER: The latest earnings from GM and Chrysler follow a truly dismal report from Ford earlier in the week. Ford lost $5.8 billion in the third quarter.
Jack Speer, NPR News. Washington.