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GM posts 2Q profit of $1.33 billion
GM has been working to streamline operations and slash costs. It has shed four brands, changed leadership and last week announced its U.S. dealership network would number 4,500, about 25 percent smaller than it was in early 2009.
But it still faces hurdles. GM’s U.S. sales rose 14 percent in the first six months of this year compared with a similar period in 2009, according to AutoData Corp. That was slightly less than the average industry increase of 17 percent. GM had the highest incentive spending of any major automaker at $3,691 per vehicle, almost $1,000 more than the industry average, according to Edmunds.com.
GM also has relied heavily on sales to rental-car, government and corporate fleets, which are less profitable than sales to individual customers. Retail sales — or sales to individuals — were up 11 percent industrywide through June, but up only 1 percent at GM.
GM is the last of the Detroit automakers to report second-quarter results. Ford Motor Co. made $2.6 billion, its fifth straight quarterly profit. Chrysler Group LLC, which got $15.5 billion in federal aid, narrowed its second-quarter loss to $172 million.
But the U.S. government and GM’s other stakeholders — a United Auto Workers health-care trust, which owns 17.5 percent of the company; the Canadian government, which owns 11.7 percent; and old bondholders, who own 9.8 percent — ultimately will decide how much of their equity to sell.
A GM IPO could be the largest such sale in U.S. history. It would have to bring in $70 billion to pay back all of GM’s stakeholders; some analysts expect the IPO will be worth at least than much. That would be more than Ford’s market value of roughly $44 billion but less than the total value of Toyota’s shares of about $113 billion.
Currently, the largest U.S. IPO is a 2008 offering by Visa Inc. that netted nearly $18 billion.
GM is taking steps to boost its U.S. sales. In July the company said it would buy AmeriCredit Corp., an automotive financing company that serves the subprime market, for $3.5 billion. Though it was partners with Ally Financial Inc., formerly known as GMAC, GM previously lacked a so-called captive financing company, which can offer better rates to customers than outside financial sources.
GM also has several new vehicles in the pipeline. Its new Chevrolet Cruze, due out next month, is GM’s latest bid to make a desirable — and profitable — small car. Later this year, the company will begin selling the Chevrolet Volt, a $41,000 electric car with a small gas engine that extends its range.
AP auto writer Dan Strumpf contributed from New York.
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