General Motors reports record profits

Adriene Hill Feb 16, 2012

Adriene Hill: GM announced record profit today, more than $7.5 billion last year. That’s up 62 percent from 2010, but analysts were expecting better.

For more, we go to Michelle Krebs. She’s a senior analyst at Edmunds.com. Good morning.

Michelle Krebs: Good morning.

Hill: So why is GM doing so well?

Krebs: Well General Motors had a record year, they had profits of $7.6 billion. A lot of it has to do with the simple fact that the economy improved; it was a very good for car sales, considering. So they enjoyed that boom. The other thing that benefitted GM and the Big Three is the fact that Toyota and Honda kind of were out of the game last year because they had a lot of disruptions in their production because of the March earthquake.

Hill: So why are analysts disappointed by these numbers, then? They look good.

Krebs: Well despite GM setting a record, it wasn’t what analysts thought it would be. Analysts thought it would be $8 billion or higher. And I think what’s really concerning is the trend of the fourth quarter; the fourth quarter was the lowest quarter since General Motors’ IPO. And there are some storm clouds on the horizon that are concerning.

Hill: Now, what’s in these numbers for carbuyers? Anything we can glean about this year?

Krebs: Well I don’t specifically for GM numbers, but what we expect in the United States are continued improvement in overall car sales. But we do a much more competitive landscape this year because Toyota and Honda will be back in full force after disruptions last year from the earthquake, and a lot of new product that’s going to be a very competitive segment. And when it’s competitive, you may see some incentives, and that’s good for consumers.

Hill: Michelle Krebs is senior analyst at Edmunds.com. Thanks.

Krebs: Thank you.

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