GM profits, but still disappoints

Adriene Hill Feb 16, 2012

Adriene Hill: We found out today that GM made record profit last year — more than $7.5 billion. That’s up more than 60 percent from 2010. But it wasn’t enough to impress analysts.

For more about why, we’ve got Micki Maynard with us now. She’s the editor-in-chief of the Midwestern radio project Changing Gears, and joins us from Detroit. Good morning Micki.

Micki Maynard: Good morning.

Hill: So GM announced record profits today, but it’s still disappointing. Why?

Maynard: Well there are a couple of reasons. First and foremost, it’s Europe. General Motors and Opel and Vauxhall operations lost more than a half a billion dollars just in the fourth quarter. And to give the listeners an idea of how big those are, Opel and Vauxhall just a few less cars than Chevrolet. So imagine if Chevrolet lost half a billion dollars. That’s what we’re talking about here.

Hill: Now GM and pretty much all of Detroit seemed to be turning things around. And now it looks like Europe that might end up derailing this?

Maynard: Yes, and it isn’t just Europe. There are issues in South America, there’s some issues in Asia and of course, the North American market is extremely competitive. Even though General Motors is profitable here, its net income in the fourth quarter was essentially flat. And I think a lot of people look at that fourth quarter and say, hey, it’s the end of the year, this is our last chance to make some good money. And so to be flat with a year ago kind of spells a little bit of concern.

Hill: And what’s it mean for me as a carbuyer?

Maynard: Well for you as a carbuyer, it might mean that we’ll see some incentive programs, because one of the things that carmakers do to improve revenue and profits is sell more cars. Now, GM has been very cautious on that; they came out of bankruptcy, now they don’t want to get in the same hole that they did before. But for carbuyers, I would keep watch on the model that you’re interested and go and talk to your dealer — there might be programs that aren’t publicized that the dealer can offer you.

Hill: Sounds good. Micki Maynard is the editor-in-chief of the Midwestern radio project Changing Gears. Thanks.

Maynard: My pleasure.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.