GM: Finally turning a corner?

Marketplace Staff Aug 4, 2011
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GM: Finally turning a corner?

Marketplace Staff Aug 4, 2011
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STEVE CHIOTAKIS: General Motors today reported its profit nearly doubled in the 2nd quarter — thanks to higher prices on its cars and trucks. Some analysts believe GM may’ve made a turn from its unprofitable days of the past. Dennis DesRosier is an auto industry analyst, and he’s with us this morning from Toronto. Hi, Dennis.

DENNIS DESROSIER: Yes, hi, thank you very much.

CHIOTAKIS: You got it. It sounds like GM’s profits were pretty strong. It was able to charge higher prices, why is that?

DESROSIER: They’ve got themselves leaned out a little bit and they’re producing vehicles that consumers like. When you do that, you can charge a little bit more. Five quarters in a row of profits for GM, and they’re coming together. I still think there’s a lot of work to do from a market perspective, and within the company. They’re far from being entirely out of the woods, but five quarters of profits is nothing to sneeze at.

CHIOTAKIS: How did that gas price increase, affected, do you think, the sales? Obviously they did well despite it, right?

DESROSIER: Well, they did. Gas prices and the size of vehicle is directly proportional. You can go in month-in and month-out, and if gas prices start to go up, people buy smaller vehicles. Gas prices come down, people buy larger vehicles.

CHIOTAKIS: You think the Japan quake had any impact — or will have any impact?

DESROSIER: Oh, absolutely. Japan probably cost the North American and Japanese manufacturers a million units of sales — easily. Now some of those consumers are just gonna hang in there and wait for their Japanese product — but I’ll bet you about half of them, perhaps, you know, left the Japanese brand, and went over to other companies. Ford was the biggest beneficiary of that, I believe. But, sure, GM would have benefited as well, and Chrysler.

CHIOTAKIS: Dennis DesRosier is an automotive industry consultant. Thank you.

DESROSIER: Thank you very much, take care.

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