GM profits soar to $3.2 billion in first quarter
General Motors vehicles go through assembly after GM celebrated the official launch of the Chevrolet Volt hybrid electric vehicle at GM's Detroit-Hamtramck Assembly November 30, 2010, in Detroit, Mich. The Volt extended-range electric vehicle, for which 1,000 jobs will be created by General Motors over the next two years, started production earlier this month.
STEVE CHIOTAKIS: General Motors this morning reported its highest quarterly profit in more than a decade. Not bad for a company that was bankrupt two years ago. How are they doing it?
Marketplace's Nancy Marshall Genzer takes a look.
NANCY MARSHALL GENZER: GM earned $3.2 billion in the first quarter. GM thrived, even with the spike in gas prices, because it was selling more small cars.
Michelle Krebs is an auto analyst at Edmunds.com.
MICHELLE KREBS: General Motors sold 25,000 Chevrolet Cruze models. That's the little car they didn't have before. That's off the charts. And that will continue. Their biggest problem will be can they build enough of them.
GM didn't used to make much money off of selling small cars. But it's restructured, lowering its costs. GM is also offering fewer incentives to buyers, like low interest loans and rebates. One bit of bad news. GM didn't sell as many cars in China during the first quarter. GM says that's because the Chinese economy is cooling off a bit.
In Washington, I'm Nancy Marshall Genzer for Marketplace.
STEVE CHIOTAKIS: General Motors said today its profit more than tripled in the last quarter. That means the automaker's turned a profit for more than a year since emerging from bankruptcy.
Michelle Krebs is an analyst for Edmunds.com and joins us from the road in Michigan. Good morning Michelle.
MICHELLE KREBS: Good morning.
HOBSON: What's driving these big results for GM?
KREBS: Well, General Motors had a great quarter, earning $3.2 billion. It's being driven by higher sales largely around the world. And particularly here in the U.S. and in China.
HOBSON: What's the bottom line in China? How come they're selling so much more in China?
KREBS: General Motors is one of the first players in China, in fact I remember when they went into China people thought they were crazy. That turned out to be crazy-like-a-fox kind of move. They're the leader in China and they keep adding new models and they've really expanded the Chevy line there. So it used to be Buick was the leading brand there. Now they've added Chevy. So, they're just doing great things in China.
HOBSON: So, all right. We've got higher gas prices now, Michelle. Can GM keep this up?
KREBS: I think so. They are in a far better position than they've ever been in history because they have much more fuel efficient vehicles. If you look at April sales which just were reported yesterday, General Motors sold 25,000 Chevrolet Cruze models. That's a little car that they didn't have before. That's off the charts. And that will continue. They're biggest problem will be can they build enough of them.
HOBSON: Michelle Krebs, an analyst at Edmunds.com. Michelle thanks.
KREBS: Thank you.