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General Motors IPO: Three Things Bankruptcy Taught GM

General Motors (GM) CEO Dan Akerson said today GM has learned its lessons.

"We know how we arrived here, we know what went wrong, and we have learned from that," he said in a conference call with reporters, as GM enjoyed its first day back on the New York Stock Exchange after an absence of nearly a year and a half.

The lessons GM learned are shown by what actions GM has taken. According to CFO Chris Liddell, GM's turnaround plan boils down to three simple points:

That implies these lessons learned:

Car companies should be engineered to be profitable in the worst economic conditions.
Not long ago, GM and its rivals hoped to make enough money in hugely profitable good years to survive hugely unprofitable bad years. Today, GM and rival Ford (F) are turning a profit in 2010, despite the next-to-worst U.S. auto sales since World War II. Chrysler still has a way to go to turn a profit, but Chrysler is definitely on the cost-cutting, lower-your-breakeven bandwagon, too.

Emerging markets are where the growth is.
GM got 39 percent of its 2009 sales in the emerging BRIC markets of Brazil, Russia, India and China, of which China is by far the largest. GM points out in its IPO documents that about 72 percent of its 2009 sales were outside the U.S. The outlook for growth is also good for mature markets, but only because they are still recovering from the present downturn.

Global platforms save money.
GM has always been big overseas, especially in Europe. But before its current crisis, its operations outside the United States were a lot more autonomous. "Old GM" had the worst of both worlds. It had cars that looked alike on the outside, but cost a ton of money to produce, because they shared nothing on the inside. The new idea is to develop cars that look different on the outside, but share costs on the inside.

These aren't new concepts. But bankruptcy restructuring allowed GM to shortcut a lot of measures it had been working on for years.


Photo: GM