- The Washington Times - Thursday, March 29, 2007

A year ago at this time, rumors of GM’s imminent bankruptcy were rampant, but the more recent news has been encouraging.

GM reported it earned $950 million for the fourth quarter of 2006, its first profitable quarter in two years. For all of 2006, GM still lost money, but significantly less than the year before — $2 billion compared with $10.4 billion in 2005.

That’s in stark contrast to GM’s crosstown rivals, who are only beginning to implement their turnaround plans. Ford reported a $12.7 billion loss in 2006, its worst performance in its 103-year history.

Chrysler Group lost $1.5 billion.

On the product side, GM surely is showing signs of renewed life. Once GM was famous for styling and its flair is returning, starting with Cadillacs and now making its way to such bread-and-butter models as the Chevrolet Malibu.

More significantly, GM is leapfrogging the competition in interior design. The Saturn Aura and Sky were first to demonstrate GM still knew how to do good interiors. The 2008 Cadillac CTS and 2008 Chevrolet Malibu take design to another level.

GM’s success stories are mounting. Cadillac’s turnaround has been phenomenal and well documented. But Saturn and often-overlooked GMC are just as impressive. They were the only two domestic

brands in the U.S. to have higher sales in 2006 than in 2005, and they are having particular success in the all-important California market.

On the numbers side, GM has lowered unprofitable daily rental fleet sales; reduced incentive spending to its lowest level since April 2002, though it has announced March incentives to keep its sales momentum going; brought transaction prices closer in line with manufacturer’s suggested retail prices so it discounts less; eliminated 34,300 union jobs through buyouts and early retirements; and announced it will close 12 North American facilities by 2009 in line with its lower sales and market share.

In addition to the recently announced financial results, GM is seeing some payoff. Its market share is edging upward and more car shoppers are considering GM products.

GM is also winning awards. GM swept the 2007 North American Car and Truck of the Year awards, only the second time in the history of the awards that a single manufacturer has won both honors.

A new national poll of 1,000 Americans by Rasmussen Reports shows 69 percent think favorably of GM, a major jump from 48 percent last year. Fortune magazine’s 2007 ranking of America’s Most Admired companies saw GM climb to fifth from ninth in the motor vehicle sector.

J. D. Power and Associates ratings show GM quality is improving. Harbour Consulting’s on manufacturing efficiencies illustrates GM is moving in the right direction.

GM has been stealing the show on the international auto show circuit. In Detroit, GM introduced the 2008 Cadillac CTS, the 2008 Chevrolet Malibu and the ground-breaking Chevrolet Volt plug-in hybrid.

In Chicago, GM introduced the Saturn Astra, and the flagship Pontiac G8 sedan. Most recently, at the Geneva auto show, GM introduced the Opel GTC concept that hints at the future direction of GM midsize cars, including the Saturn Aura and Chevrolet Malibu.

Still, GM is declaring no victory and recognizes much work and many challenges lie ahead. At the top of the to-do list is GM’s upcoming contract with the United Auto Workers’ union; the current contract expires in September.

GM absolutely must negotiate a favorable contract with the union. GM has to address skyrocketing health care costs ($4.7 million this year). GM must negotiate an agreement and avert a strike, costly in more ways than one.

GM cannot afford any missteps or any backsliding on its commitment to be best-in-class in various segments and a fuel economy leader.

Introduction of a production version of the ground-breaking Chevrolet Volt plug-in hybrid concept would go a long way toward changing perceptions of GM as a leader in technological innovation — a reputation it once owned — and GM as an environmental leader.

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