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Amid political posturing, GM announces record year
Buoyed by strong sales in North America and Asia, General Motors Co. on Thursday announced a record profit of $7.6 billion in 2011, a $2.9 billion increase over 2010 and another sign that the world’s largest carmaker has bounced back after nearly going under three years ago.
Although the company reported continuing losses in its European and South American divisions and lower-than-projected fourth-quarter profit margins and sales, the news helped push GM’s stock up $2.24 - 9 percent - to $27.17, its highest level since late October.
The company said it sold a total of 9.03 million cars and trucks last year, up 7.6 percent, allowing it to reclaim the title as the world’s biggest carmaker from Japanese rival Toyota Motor Corp., whose sales were affected by last year’s earthquake and tsunami.
“In our first full year as a public company, we grew the top and bottom lines, advanced our global market share and made strategic investments in our brands around the world,” Chairman and CEO Dan Akerson said in a statement.
The earnings report will be scrutinized closely, both as a barometer of the Detroit auto giant’s financial health and for the political fallout between President Obama and Republican critics on the wisdom and effectiveness of the nearly $63 billion taxpayer bailout of GM and Chrysler Group LLC.
Mr. Obama, who greatly expanded the bailout begun under predecessor George W. Bush, has increasingly claimed credit for the decision - and chided his GOP critics - as the economic news out of Detroit has brightened. Republican presidential nominee Mitt Romney, a Michigan native whose father once ran American Motors Corp., argues that the taxpayer bailout was a mistake and a private bankruptcy reorganization should have been tried.
“When I took office, the American auto industry was on the verge of collapse,” the president said on a visit to a Milwaukee factory Wednesday. “And there were some folks who said we should let it die.”
White House spokesman Jay Carney said the GM profit report was “another milestone” in Detroit’s comeback, with the Big Three of GM, Chrysler and Ford Motor Co. all now solidly profitable and hiring new workers.
Mr. Romney, campaigning ahead of Michigan’s Feb. 28 primary, said Thursday that he was “delighted” at GM’s comeback, arguing the federal bailout and forced restructuring were equivalent to the managed bankruptcy he had advocated.
“I love the businesses of this state, I love the auto industry. I want to see it thrive and grow,” said Mr. Romney, speaking at a luncheon at the Greater Farmington-Livonia Chamber of Commerce.
GM executives noted that the company’s Chevrolet division sold a record 4.8 million vehicles, 2 million outside the U.S. market, rising to the list of top five global brands.
The company is also bullish on global auto demand in the coming year, particularly in new markets in Asia and Latin America.
But GM’s Opel subsidiary, operating in depressed European markets, remains a sore spot, posting 12 consecutive unprofitable quarters and losing $747 million in 2011, despite hopes from the company that the unit would be in the black by now.
“We clearly have work to do in Europe,” Mr. Ammann said. “We have work to do in the South America business. Frankly, we have work to do all around the company in terms of cost opportunities.”
GM announced that its workers would be receiving a $7,000 profit-sharing check based on 2011 results, but U.S. taxpayers are unlikely to be repaid as quickly. The government still controls about 32 percent of GM’s stock, which must double to an estimated $53 per share for taxpayers to break even on the bailout.
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