How GM made its first-quarter profit

Alisa Roth May 17, 2010
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How GM made its first-quarter profit

Alisa Roth May 17, 2010
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by Alisa Roth

GM has been closing plants and cutting jobs. It’s also been making a lot fewer vehicles than before.

Erich Merkle, an auto industry analyst in Michigan, says bankruptcy has really helped GM start making money again.

“They shed a lot of their overhead cost structure and they got rid of a lot of debt,” says Merkle. “So it makes them very profitable at much lower sales volumes.”

Merkle says GM is still losing market share. But sales overall are growing. He says the company is also making better cars. Some of the most popular models have been SUV crossovers, like the Chevy Equinox and the Cadillac SRX.

The big question now is when GM will go public again. Merkle says that could happen by the end of the year.

“It’s not a race, we shouldn’t be racing to issue an IPO,” says Merkle.

Merkle says he expects GM to post profits for the whole year. But GM says China’s insatiable appetite for cars is slowing down. And the economic situation in Europe is unstable. Both of which might cut into its profits.

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