General Motors lost $1.2 million in its third quarter, results that were much better than expected for the ailing carmaker. After declaring bankruptcy and accepting more than $50 billion in U.S. aid, the company’s losses seem almost under control.
This week the new General Motors reported that revenues were up 21 percent for the quarter and that it had increased its cash reserves to $42.6 billion ”“ not bad for a company that lost $6 billion in its first quarter.
The results don’t compare to the $1 billion quarterly profit recently reported by Ford, but they are a hopeful sign that the company can return to profitability, and that the U.S. Treasury may eventually recoup a substantial part of the rescue funds pumped into G.M.
But like all long-term investors, taxpayers will have to wait patiently for a turn-around.
Chief Executive Fritz Henderson said the results showed “some signs of progress,” and that the company would dip into its reserves to make a a good-faith gesture ”“ a $1 billion payment to the government more than five years before its loans are due.
Henderson described it as a sign of the company’s commitment to repaying U.S. taxpayers. He also said G.M. hopes to also repay others, like the United Automobile Workers Union, for the sacrifices they have made on behalf of the company.
Reaching this goal will take a sustained effort. Like other automakers, G.M. benefited this year from the generous Cash for Clunkers program that drew millions of customers to dealers’ showrooms. The months ahead are likely to be lean ones for automobile manufacturers.
General Motors is working toward introducing smaller, greener cars, like the Chevrolet Spark, a microcar due in showrooms by 2011. But for now its top sellers remain two familiar, full-size vehicles, the Chevrolet Silverado pickup truck and the Impala sedan. Although a new G.M. will eventually emerge,
The quarter’s unexpectedly strong numbers are not expected to lead to bigger payrolls any time soon. Henderson said G.M. does not anticipate any surge in auto sales during 2011. The firm’s $1 billion repayment is a nice gesture, but the billions invested by the government in General Motors stock means taxpayers are holding a long-term investment in the company.
Like any good CEO, Henderson promised to do his best for these stockholders. “It is my mission ”¦ to create value in the company so the taxpayers can get a return on their investment.”
— Questions? Comments? Contact Managing Editor Nick Cowenhoven at nickc@journaltribune.com or City Editor Kristen Schulze Muszynski at kristenm@journaltribune.com.
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