GM Posts Best Quarter In Years, Buoyed On U.S. Product

May 5, 2011
2013 Chevrolet Malibu

2013 Chevrolet Malibu

General Motors [NYSE: GM] is proving that it's truly back in the black. For the fifth straight quarter since emerging from bankruptcy, it posted a net income. In fact, it's not just GM's best financial performance since the 2009 bailout; it beats the company's results for many years prior.

For the first quarter of 2011, the company's net income was $3.2 billion; and even considering its sale of Delphi Automotive, it earned about $2 billion—more than double the $865 net income for the same period in 2010. Earnings per share have more than tripled since the first quarter of 2010, too.

GM is anticipating that profits will improve over the rest of the year, thanks to newer vehicles with a more favorable pricing structure and cost cuts. Revenue has grown by $4.7 billion (15 percent), to $36.2 billion—despite rising commodity costs and, in general, the shift to cars from GM's longtime light-truck profit base.

At the heart of these improvements—if you don't count the legacy obligations that bankruptcy freed the company of—are that the automaker's product line has been thoroughly recast with the introduction of a number of smaller, more fuel-efficient passenger-car models such as the 2011 Chevrolet Cruze. Its 2012 Buick LaCrosse will come standard with a eAssist mild-hybrid system that yields 37 mpg highway, and both an all-new 2012 Chevrolet Sonic small-car later this year and a completely redesigned 2013 Chevrolet Malibu lineup next year should help continue the automaker's focus on that part of the market.

GM remains one-third owned by the U.S. government. Last month, sources within the Treasury Department revealed that the federal government is planning to sell its stake in the automaker soon after its IPO lock-up expires—which would be late this month.

The strong U.S. performance was enough to offset a slightly lower performance for GM elsewhere in the world. In Europe, the company posted a pre-tax-and-interest $390 million loss; it posted profits in China and South America, but in both the numbers were down versus a year earlier.

"GM has great potential to deliver profitable growth around the world as the recovery continues," said Dan Ammann, senior vice president and CFO, in a release accompanying the results. "While we're encouraged, we keenly recognize we have more opportunities to leverage our scale, improve spending and investment efficiencies, and optimize our strong balance sheet."

[AutoWeek; General Motors]

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