GM Profit Hype Antidote

Mickey Kaus Columnist
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Your GM Profit Hype Antidote: Bailed-out General Motors announced a $3.2 billion quarterly profit. Impressed? Not so fast. 1) Big one-time gains from asset sales, including $1.6 billion from sale of Delphi parts maker; 2) China sales are actually down. The profits mostly come from North America. 3) And North American profits are disappointing, says Reuters ($). GM has had difficulty getting high prices for its vehicles; 4) Sales and prices are up recently in part only because competing Japanese car suppliers have been crippled by the earthquake and tsunami. GM’s stock fell today and is still below the initial IPO price. … Losses to taxpayers as high as a Rattner Unit are still quite possible. … More to the point: Can GM’s supposedly crucial compact Cruze possibly compete with Ford’s new Focus (e.g. sell without big discounts)? Yes, if early reports of small Ford unreliability are borne out and puncture that company’s current aura of quality. Otherwise, it’s hard for me to see. …

Mickey Kaus