GM Posts Record Profit In Its 103 Year History

Economy • 2/16/12 12:09:44 pm • Views: 1,222

Strong sales in the U.S. and China helped the 103-year-old carmaker turn a profit of $7.6 billion, beating its old record of $6.7 billion in 1997 during the pickup truck and SUV boom.

Remember, government stimulus doesn’t work. Also, looks like Romney was dead wrong about this leading to ruin.

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5 comments

lawhawk Thu, Feb 16, 2012 12:23:57pm

A couple of points.

The bailout only delayed what everyone expected to be a bankruptcy reorganization. The Bush bailout pushed that decision into Obama’s term, and the Obama Administration gave both GM and Chrysler additional time and money to turn the companies around. When those efforts failed, the reorganization was what helped set the companies on an improved course by shedding debt and altering fundamental contracts and positions between the automaker, the Unions, and taxpayers. Taxpayer money may have helped in the reorganization efforts, but I’d argue that GM could have gotten to this point without the bailout if they were forced into reorganization sooner.

Taxpayers still own significant percentage of GM - a position that the US government can’t sell without taking a loss unless the share price rises significantly above the current trading price.

Still, it’s good to hear that the company is turning a profit and that its profit per vehicle is going in the right direction. That’s the bottom line.

Political Atheist Thu, Feb 16, 2012 12:26:12pm

Congratulations to all the innovative people at GM, the union, and the suppliers that made this happen.

Why is the stock so cheap?

KingKenrod Thu, Feb 16, 2012 12:45:47pm

Romney and Obama essentially supported the same plan, a unique structured bankruptcy, although the details were different as Obama did more to protect union interests. The “bailout” Romney objected to was a no strings handout that the car makers originally asked for. You just have to read what he said:

Romney: Let Detroit Go Bankrupt

More here at TPM:

Then a funny thing happened. The new Obama administration came in and, rather than continuing to write a “bailout check,” did just what Romney had recommended. GM and Chrysler were forced to go through a managed bankruptcy in which the government provided the loans and guarantees needed to keep them afloat. In exchange, workers and bondholders had to make concessions.

SpaceJesus Thu, Feb 16, 2012 1:47:57pm

re: #1 lawhawk

re: #3 KingKenrod

That’s not really what I’m hearing.

From the Economist:

As with much of Mr Romney’s excessive rhetoric, there is some truth to this statement. Following the bail-outs, the president eventually forced Chrysler and GM into bankruptcy, a step Mr Romney thought should occur naturally. And the government oversaw painful restructurings at both companies, which were largely in line with Mr Romney’s broad suggestions. But the course Mr Romney recommended in 2008 began with the government stepping back, and it is unlikely things would’ve turned out so well had this happened.

Free-marketeers that we are, The Economist agreed with Mr Romney at the time. But we later apologised for that position. “Had the government not stepped in, GM might have restructured under normal bankruptcy procedures, without putting public money at risk”, we said. But “given the panic that gripped private purse-strings…it is more likely that GM would have been liquidated, sending a cascade of destruction through the supply chain on which its rivals, too, depended.” Even Ford, which avoided bankruptcy, feared the industry would collapse if GM went down. At the time that seemed like a real possibility. The credit markets were bone-dry, making the privately financed bankruptcy that Mr Romney favoured improbable. He conveniently ignores this bit of history in claiming to have been right all along.

Buck Sun, Feb 19, 2012 10:53:06am

How to make $7 billion profit:

First get someone to give you $36 Billion……

Auto

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