GM on the Mend
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
When is a loss good news? When you're General Motors and the loss could have been worse. Call me a cheerleader or a concerned citizen, but I have been GM throughout the financial crisis.
This morning, GM announced that it lost $1.2 billion in Q3. Yes, we'd like to see profits, but the news is movement in the right direction. Pessimists might note that it's a lot easier to get back on track when you wipe out a boatload of your outstanding debt and the taxpayer pumps billions of dollars into the endeavor. True enough, but GM had some good news on that front too - the company said that intends to re-pay the $6.7 billion US taxpayer loan by the middle of 2011. Here again, the more cynical will remind you that those loans represent something like 13% of the $52 billion of the government's infusion over the past year, still, I'd prefer to get the money back, wouldn't you?
What's next for GM? During the earnings call, CEO Fritz Henderson said that the company is seeing signs of "stability" in the in the auto sector and that vehicle sales should increase from about 10.7 million vehicles annually today to 11-12 million next year. The company has also seen some success in China and is trying to address problems in Europe, especially after backtracking on the sale of Opel.
GM's progress will be predicated on taking small steps like today's news. For some reason, there are people out there who want GM to crash and burn, as some lesson in union negotiation or some kind of libertarian claptrap. Considering that we have fronted the bill on both GM and Chrysler, I'd prefer success.
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