General Motors Renaissance Center, Detroit, MichiganEnlarge Photo
Yesterday, J.D. Power confirmed that Detroit is gaining ground on its foreign rivals in terms of vehicle dependability. Today, there's more good news for fans of the Big Three: General Motors has announced stunning financial results from 2011, marking the first time in years that Chrysler, Ford, and GM have all been profitable at the same time.
Now that 2011's beans have been counted, GM says it brought in $150.3 billion over the course of calendar year -- an 11% increase over 2010. After bills were paid, GM was left with $7.6 billion in net revenue, up from $4.7 billion last year.
GM's strongest performance was in North America, where the company recorded earnings before interest and taxes of $7.2 billion. Also faring well: GM's International Operations division, which includes the booming Chinese market. There, the company reported an EBIT-adjusted gain of $1.9 billion. Not surprisingly, financially volatile Europe was GM's weak spot, generating an EBIT-adjusted loss of $0.7 billion.
The big picture
This is an impressive comeback story for an automaker that, like most companies, has recently endured some rocky years. GM emerged from bankruptcy in July 2009, then went public less than a year and a half later, in November 2010, with one of the largest IPOs in U.S. history.
We could spend a lot of time debating whether GM might've been able to pull off these feats if Presidents Bush and Obama had simply let Detroit go bankrupt (a policy that many now believe would've left the U.S. on even shakier financial footing), but we're rarely the kind to play shoulda-woulda-coulda. The bottom line is: GM has managed to find the light at the end of the tunnel.
GM's success is attributable to a number of factors -- not least of which are (a) spinning off and shuttering four brands to focus on core products, and (b) working hard to gain a foothold in China and other emerging markets. Ford has taken a similar approach, and it recently released its best earnings report since 1998.
Even Chrysler, which has added two brands to its family since its 2009 bankruptcy, posted a profit for 2011 -- its first since 2005.
All told, this marks the first time since 2004 that all three Detroit companies have been in the black.
Of course, the companies themselves aren't entirely responsible for their success. Since 2009, the U.S. as a whole has wobbled and weaved toward financial stability, and although it seems as if we manage to take one step back for every two steps forward, economic indicators are generally pointed in the right direction.
That's been a huge boon to the auto market. It's restored consumer confidence, giving them the courage to shop for cars again. It's also helped make credit more readily available -- something that prohibited many would-be buyers from looking for new rides during the depths of the Great Recession.
We're a little too cautious to say that we're fully out of the woods just yet, but the signs are encouraging -- and really, who doesn't like a little encouragement on Thursdays?