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Celebrate profits, but there are hurdles

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Celebrate profits, but there are hurdles

BY MARK PHELAN

FREE PRESS COLUMNIST

Congratulations. Now get back to work.

That's how long the celebrations at GM should last after Monday's announcement of an $865-million profit.

From the chairman's office atop the Renaissance Center to the plant floor, there's reason to briefly feel good today while continuing to worry about tomorrow.

The first-quarter profit and a 12.9% increase in U.S. sales through April suggest that GM's on the right track with its slimmed-down four-brand lineup and strong new vehicles.

This being GM, however, prudence requires a look at the cloud behind that silver lining.

Consider:

• With about 10% less revenue, Ford banked more than twice the profit GM did in the first quarter.

• Toyota, beset by recalls and legal troubles, notched a 12.8% increase in U.S. sales through April.

The four-brand strategy looks like a winner. GM disposed of Hummer, Pontiac, Saab and Saturn so it could concentrate resources on Buick, Cadillac, Chevrolet and GMC. The absence of the departed brands distorts GM's sales this year, but the survivors are an encouraging 31% ahead of 2009's pace.

It'll be easier to judge GM's strength later this year, when Hummer & Co. have been out of the picture for 12 months. By late fall, GM should be showing monthly sales increases similar to Ford.

The most important vehicle coming this year is the Chevrolet Cruze compact. The Cruze's 40-m.p.g. highway fuel economy promises to tower over other compact cars and nearly all subcompacts.

A smooth launch late this year for Chevrolet's high-profile Volt electric car is also imperative.

Buick has to start pulling its weight, too. The brand's sales are up 50% vs. 2009, but compared with anything but its own dismal past, Buick's present is a disappointment.

link:

http://www.freep.com/article/20100518/COL14/5180343/1210/BUSINESS01/Celebrate-profits-but-there-are-hurdles

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