Actually, it’s been only three years since what was once the world’s biggest corporation turned a profit, though it seems like much longer. Since then, ownership has passed from the stockholders to the U.S. government. Taxpayers have spent more than $50 billion - that’s billion with a “B” - to keep GM from going out of business.
Pontiac, Saturn and Hummer have joined Oldsmobile and Tyrannosaurus Rex on the extinct species list, and Saab was given up for adoption. The company which sold more than half the cars and trucks Americans bought in the early 1960s now sells fewer than one out of every five vehicles, and that’s unlikely to change.
But the news of profitability seems to have been more than a fluke. No, General Motors is not out of the woods yet.
No, they haven‘t yet proven the wisdom of bailing them out. Nor are they ready to return to the private sector. But the company’s net quarterly profit of almost a billion dollars is encouraging in a lot of subtle ways. Best of all, General Motors actually made money in North America, made more than a billion from selling cars and trucks in its core market. That has often not been the case in recent years, even when the giant automaker was profitable.
GM also made money in Asia. The one dark cloud was a half-a-billion dollar loss in Europe, where the economy and the euro look increasingly shaky. Don’t look for those numbers to improve soon.
Nor should anyone assume that General Motors itself is out of the woods. One quarter does not prove much of anything. This is a company that lost $88 billion dollars in the last five years.
This is a company that would not exist today without government bailouts. There is, as yet, no long-term plan to get to the point where the company is stable and profitable enough for the government to sell it back to the public and thereby recover as much as possible of the taxpayers’ huge involuntary investment in GM.
Yet the most encouraging thing may be that GM executives seem to understand this. Their profit announcement was free of the braggadocio you would have seen in the bad old days.
There are other good signs too. Inventories have fallen dramatically, and the company is offering fewer incentives. That’s because there is more legitimate demand for GM vehicles, and a few hot sellers like the Equinox and the Camaro.
As Winston Churchill once said in a different context, this is not the end of General Motors’ troubles. Nor is it even the beginning of the end. However, it may be the end of the beginning.
These first quarter figures seem to show that the public is willing to give GM a chance. New chairman Ed Whitacre Jr, and his team seem focused on their core business: Making and selling cars. However you feel about the bailout, and whatever kind of car you drive, it’s hard not to hope that GM succeeds.
We the people need it to. After all, it is our money at stake.
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