GM, Profitability by 2011

Things are getting better for former bankruptcy automaker General Motors who's experiencing high sales in the domestic market following the US government scrapping scheme. And the future sounds good as analysts are forecasting positive results for the remainder of the year, as well as a successful 2010. Furthermore, 2011 is likely to be the year when General Motors returns to profitability, if the restructuring process continues as planned.

Ford, who also estimated to post profit in 2011, might reach its goal even sooner, a Deutsche Bank analyst was quoted as saying by It could do that if it follows the same rate of cost reductions and market share gains, North America equity research director Rod Lache said.

"So far, the evidence strongly supports that the US government's intervention was successful. Companies emerged a lot healthier," Lache said. "Inaction by the US government, on the other hand, would have likely resulted in the failure of GM and Chrysler."

"Mathematically, it appears that US automakers can make money at much lower levels of volumes," Lache added.

General Motors is one of the companies that benefited the most from the US Car Allowance Rebate System. The Detroit Three accounted for 45.3 percent of all CARS sales, with General Motors taking the lion's share - 18.7 percent of new sales. Toyota came second with 17.9 percent while Ford was third with 16 percent of all sales.

The White House administration is now urging senators to approve a $2 billion extra package for the scrapping scheme, allowing the auto industry to continue the growth it started two weeks ago with the government stimulus plan.
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About the author: Bogdan Popa
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Bogdan keeps an eye on how technology is taking over the car world. His long-term goals are buying an 18-wheeler because he needs more space for his kid’s toys, and convincing Google and Apple that Android Auto and CarPlay deserve at least as much attention as their phones.
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