Emerging markets give GM a lift

2 posts in this topic

General Motors's Wuling minivans and Chevrolet Spark minicars are so popular in China that even the vehicles reserved for test drives at its Liuzhou factory have been sold. GM is hiring 500 more workers to keep up with demand.

In Lordstown, Ohio, meanwhile, GM is pressing the United Auto Workers union to give up janitorial jobs.

The contrasting pictures in Asia and North America show why - just 18 months after the chief executive, Rick Wagoner, had to fend off speculation the company might go bankrupt - GM stands to emerge as the strongest of the three U.S. automakers. By pushing sales in developing countries while slashing labor costs in costly markets like the United States, GM may distance itself from the troubles of Ford Motor and Chrysler.

"GM is very well positioned," said John Novak, an analyst at Morningstar in Chicago. "They are kind of in their sweet spot compared to Chrysler and Ford."

Sales outside the United States could lift GM's first-quarter profit, excluding restructuring costs and other one-time items, to 83 cents a share from 66 cents a share for the year-earlier quarter, according to a Bloomberg survey of 12 analysts. GM, which is to report its results Thursday, does not give forecasts.

An increase in profit would mark the third straight quarterly improvement for the automaker, which lost $10.4 billion two years ago.

"The dire pictures of 18 months ago, we never believed that," Wagoner said in an interview last month at the Shanghai Auto Show, where he introduced models for the regional market.

GM reduced its losses last year to $2 billion with union buyouts, plant closings and cuts in health-care costs. The company may earn $3.85 a share this year, according to the average estimate of 12 analysts surveyed by Bloomberg.

Ford lost a record $12.7 billion last year and $282 million in the first quarter of this year. Ford, based in Dearborn, Michigan, does not project a full-year profit until 2009. DaimlerChrysler put Chrysler, which is based in Auburn Hills, Michigan, up for sale in February after the U.S. unit posted 2006 loss of $1.5 billion. Ford restated the loss to $680 million last month because of an accounting change.

Full article:


Share this post

Link to post
Share on other sites
GM: "Reports of my demise have been greatly exaggerated..."

Share this post

Link to post
Share on other sites

Your content will need to be approved by a moderator

You are commenting as a guest. If you have an account, please sign in.
Reply to this topic...

×   You have pasted content with formatting.   Remove formatting

×   Your link has been automatically embedded.   Display as a link instead