Well, the suspense is over. General Motors announced its Q1 earnings this morning, and for the first time since 2007 the quarterly numbers are positive. GM’s net revenue jumped to nearly $31.5b on strong performances from its North American and GM International Operations (GMIO), and across-the-board sales improvement for the Chevy brand. General Motors Europe was The General’s sole unprofitable division for the quarter, losing half a billion dollars while it waits for a deal on financial assistance to clear. Operating cash flow was $1.75b, with about $755m of that going towards capital expenditures. That left just under a billion dollars in free cash flow, as GM finished the quarter with $35.7b in cash on hand. Net income attributable to shareholders was $1.068b, less $203m for cumulative dividends, for a total net profit of $865m [Full financial highlights in .doc format available here].
Look at this car, it’s horrible. How did this get through so many people?
We’ve all thought something along these lines when we first sat in a Chevy Cobalt, but few GM employees would ever say it out loud to a reporter. At least they wouldn’t until a much-improved replacement was waiting in the wings. But because the Cruze launches this year, GM execs like VP of global vehicle engineering Karl Stracke can bash on the old Cobalt to his heart’s content, knowing the Detroit News will dutifully report it as a sign that GM “gets it.”
Officials working with the Department of Energy tell the Detroit News that GM and Chrysler face no major obstacles in their quest for huge retooling loans from the DOE’s Advanced Technology Vehicle Manufacturing Loan program. GM is seeking $14.4b and Chrysler has asked for $8.55b in low-cost government loans. Says Matt Rogers, a senior adviser to the Energy Department
Project finance details need to be worked through, but those things are working out just fine as we work directly with the companies. It’s really a process of making sure that each of the projects that they have are in fact competitive.
Given what it’s been through over the last several decades, GM is lucky to have any hard-core fans left at all. And yet sites like GMinsidenews.com [full disclosure: GMI is owned by TTAC’s parent company, Vertical Scope] have thrived as havens of near-unadulterated GM pride, bankruptcy and bailout notwithstanding. So when true-believer sites like GMI run works subtitled GM Annual Feature “Deletions” Continue: 2011 shows that not all of Old GM’s habits are dead–yet, TTAC sits up and takes notice (as soon as we come sniffing around and find it, anyway). The piece opens:
Just the other day, we posted the product changes for every 2011 General Motors product in the United States. This has become an annual feature on GMI, as it is always interesting to see what tweaks or screw-ups GM is adding to the next model year. The main problem we find in the annual model year changeis is the practice of removing content from products. After glancing at the 2011 stuff, I was surprised to see “New GM” continuing the trend of deleting content.’
To be fair, the 2011 changes show fewer content “deletions” than previous model years; however the fact that any content is being entirely deleted from a product is almost laughable considering GM’s dire attempt to win back U.S. customers. Perhaps other OEM’s delete features as well (trust me, they do), but they also don’t have a perception problem to deal with. GM, you’re building great products now…stop deleting content off of them every year.
One of the things that we do not wish under any circumstance is to have an uncompetitive relationship vis-À-vis GM
That would certainly be the case if GM bought up its recently-bailed-out former captive finance arm, GMAC (now known as Ally Financial). Chrysler relies on GMAC for leasing and loans just as much as GM does at the moment, so an Ally buyout would create major long-term problems. But even if GM created a new finance arm, Chrysler doesn’t seem to think that it will be able to survive without forming its own in-house finance department. Which would then compete with GM and Ally, to say nothing of the industry’s other finance competitors. But is the rush to captive finance going to be good for anyone?
GM’s now-infamous advertisement touting the payback of government loans “may have elasticized the reality of things,” in the words of Steve Rattner, but stretching the truth apparently pays off. Automotive News [sub] reports that a London public perception-tracking firm surveyed some 5,000 consumers, and found that The General’s image has improved since the ad started running. Of course, on YouGov’s brand image scale of 100 to negative 100, GM is up only five points to “17.” Clearly there’s still work to do.
The Wall Street Journal [sub] reports that GM and Google are discussing new ways to connect the internet giant’s Android mobile phone operating system with GM’s Onstar system. OnStar’s president Chris Preuss has hinted that “big news” is coming next week, spurring speculation about the features that a partnership with Google could yield for Onstar. If such a plan is in the works, GM’s timing is quite good. Ford had previously enjoyed an exclusive license to Microsoft’s technology which underpins its Sync system, but that agreement recently expired, prompting deals between Microsoft and automakers like Fiat and-Hyundai-Kia. By becoming the first US-market OEM to partner with Google, GM could enjoy an advantage in Detroit’s burgeoning technology wars… at least until distracted driving becomes a capital crime.
Cadillac’s new ad campaign, with the tag line “The Mark of Leadership”, has received mixed reviews. Some have questioned the use of the word “mark” because it may evoke a model name long used by luxury competitor Lincoln. Others have said that the mark itself is in question, the Cadillac wreath and crest logo, is itself tainted by association with tacky blinged out Escalades of questionable aesthetic taste. Those points may be valid, but I think that there’s a more troubling problem with the slogan and that has to do with Cadillac’s heritage.
As expected, the Loan Guarantee Committee decided not to decide anything in their meeting at the Economics Ministry in Berlin. Opel had requested €1.3b in state aid from Germany. They are making the rounds in Europe to collect another €500m. Countries that committed money, such as the U.K., will only pay if Germany pays. (Read More…)
Today could be a big day for Opel. Probably, it won’t. The Loan Guarantee Committee is meeting in the Economics Ministry in Berlin. On the agenda: Opel’s request for €1.5b in state aid. The timing is not coincidental: Last weekend, elections were held in the Opel state of North Rhine Westphalia, which ended in a mess. Coalition discussions are on-going with unsure results. So let’s move quickly while Berlin can make decisions? Not exactly … (Read More…)
Three years after spinning off GMAC, with which it pioneered captive auto financing, General Motors may be considering a return to in-house finance. Bloomberg BusinessWeek reports that:
GM may buy back the GMAC business, start a new finance unit or form a partnership with banks and other lenders, said the people, who asked not to be identified because details are private. Chief Executive Officer Ed Whitacre wants to form an in-house lender before selling shares in GM as soon as the fourth quarter, one person said.
GMAC has received $17.2b in TARP aid, but recently announced a$172m Q1 profit despite concern over its bailout in congress. GM’s previous experience with in-house lending has been decidedly mixed: though GMAC was long a cash-cow for the automaker, the easy financing cashflow is said to have enabled a culture of apathy towards product development. When the credit market collapsed, GMAC went down like a ton of bricks… and would have taken GM (even further) down with it, had Rick Wagoner not spun it off and sold it to keep the lights on a little longer. In the short term, a captive finance unit might help a GM IPO, but the potential for falling back into old bad habits can’t be ignored.
Former Ford exec Ann Doyle sure seems to think so, penning an op-ed in the Detroit Free Press titled Another female auto executive bites the dust. Her thesis?
It took General Motors executive Susan Docherty 24 years of blistering hard work to build an impressive career in one of the toughest leadership laboratories for women: the global auto industry. It took GM Chairman and CEO Ed Whitacre only six months to nearly destroy it.
Given how closely GM has embraced identity politics when it suits its purposes, Doyle’s suggestion is kind of a big deal. But is there anything to it?
Advertising Age reports that GM’s surprise landing of former Hyundai and Nissan marketing boss Joel Ewanick nearly didn’t happen. In fact it didn’t happen once. GM offered Ewanick the top marketing job over two months ago according to AA, but he turned down that offer due to concerns about the position’s autonomy from GM’s entrenched “old guard” bureaucracy. As AA’s insider source puts it:
He didn’t want to have to go through a half-dozen people to get something done. He wanted to be able to get on the phone and call one person and say “Can I do this, yes or no?” and get a quick answer.
Apparently it took GM several months before coming back to Ewanick, who is considered a “rock star” of automotive marketing, with an offer that included freedom from its notoriously oppressive bureaucracy.
Recent Comments