GM--Give Them Credit For Putting Turnaround In Gear

GM logo, General Motors logo
GM logo, General Motors logo

Take that GM doubters. In the last month there's been a growing chorus of investors and auto industry followers who have started to question if the General Motors turnaround had stalled.

After all, the automaker's North American sales have been hit by the double whammy of slower production because the American Axle strike (remember, production drive revenues) has limited access to key parts and with the economy slowing down, the company's sales have deteriorated.

It looks like the naysayers are a bit overzealous in their predictions of gloom and doom. Today, the automaker posted better than expected earnings, losing $350 million in the first quarter (excluding charges) or $.62 a share. The loss was a dollar narrower than Wall Street estimates.

GM's bugaboo remains North America, where the the company lost $611 million dollars last quarter. As bad as that sounds, keep in mind the company built 100,000 fewer vehicles because of the Axle strike, and that hurt North America earning by $800 million. So, without that strike, GM would have been break even of better in its biggest market.

These numbers, along with Ford's profitable first quarter, show Detroit's automakers may finally be turning the corner. Yes, much of the improvement is coming from lower costs, but in terms of profit per vehicle they are building momentum.

And with these numbers are coming after a rough quarter financially, it may be time for people to finally believe these guys can get back in the black for good.

Yes, I can hear the doubters saying the first quarter results pale in comparison to the performance of Honda and Nissan . But, for now give GM andFord credit. Their turnaround plans are gaining traction, and maybe, just maybe, 2 of the Big 3 are ready to once again drive profitably.

Questions? Comments?