How’s the Auto Industry Doing?: GM Profits Take a 41% Nosedive
- Posted on August 2, 2012 at 12:10pm by
Becket Adams
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Maybe investing $600 million in UK soccer promos and throwing $400 million into a failing French automaker was a bad idea after all.
General Motors’ net income from April through June fell 41 percent to $1.5 billion, $1 billion less than the same quarter a year earlier, GM said on Thursday.
A $361 million loss in Europe, coupled with $19 million of red ink in South America, pulled down strong performances in North America and Asia. In last year’s second quarter, GM made $102 million in Europe before taxes.
European nations are struggling to contain a debt crisis, weak economies and high unemployment, which have sapped car buying in the region.
Even North America, GM’s profit center, showed weakness. Pretax profit fell almost 13 percent to about $2 billion. International operations, which include China, saw pretax earnings fall 3 percent to a $557 million.
Overall revenue slipped 5 percent to $37.6 billion.
Chief Financial Officer Dan Ammann wouldn’t predict when GM would make money again in Europe, saying it was largely dependent on the broader regional economy.
“We don‘t know exactly how that’s going to unfold,” he said.
GM is restructuring in Europe and has an array of new vehicles coming out this year and next around the globe. Ammann said that’s reason for optimism.
“That makes us feel good about the general prospects for the business going forward,” he said.
Still, the company predicted that its third-quarter North American pretax profit is likely to be below second-quarter results.
GM’s European sales, which include mainly the Opel and Vauxhall brands, fell 7 percent to 454,000 vehicles during the quarter as several countries went into recession and government debt problems scared away buyers. But Ammann said GM was able to keep its prices relatively steady as people paid more for new models, offsetting discounts on older models.
Earlier this month GM replaced its European CEO and added three outsiders to its management team there, including two from Volkswagen, the region’s top automaker.
In North America, Ammann said he wasn’t worried about the slip in pretax profits. During the quarter, the company shifted its salaried pension plan to an insurance company annuity, and that cut pension income by about $200 million. GM also cut truck production during the quarter as it readied for all-new models in 2013, and that affected income, Ammann said.
Final thought: If things continue in this direction, we wonder if the president will continue to brag about how he saved the U.S. auto industry while on the campaign trail.
Follow Becket Adams (@BecketAdams) on Twitter
The Associated Press contributed to this report.
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Comments (59)
AnAmerican111
Posted on August 2, 2012 at 5:02pmDon’t care! Quit buying any GM cars 4 years ago!……………………… Never again!
FORD, Mercedes & Subaru have been the last 3 purchases! Finally realized what I was missing! Great cars!
Report Post »tcseacliff
Posted on August 2, 2012 at 6:51pmwe should not have had a bailout. just let them go under , like other big corporations, and restructure themselves like other before them. the workers would have not been fired, the company would have just come back leaner,instead of the same , obviously poorly run business, again !
Report Post »Wartface
Posted on August 2, 2012 at 8:14pmAfter OWEbama stole money from the Bond holders to give it to the Union… That did it for me. I knew right then that I had bought my last Goverment Motor car.
I started doing some research as to what company deserved my $upport in the future. I liked that Ford had thought way ahead and had private financing in place before the economy crashed. But… I hate the Unions too. Ford has all union Employees. That means they have to charge extra on every car for the higher wages, higher health insurance costs for those extravagant union demands and then they have to pay the Union Boss that is going to keep getting socialist elected.
I decided to buy an American made Honda product. All legal American workers, no illegals and NO Union in the plant. I would rather it was an American owned company but I forgave that because they don’t have a socialist Union boss that will take some of the employees money and use it to elect OWEbama again.
And… It is a better quality product than a Union made car.
Report Post »docgreen
Posted on August 3, 2012 at 2:02amDoes anyone think it was obama economics? I have a feeling maybe those numbers were doctored by obama and his admin to make him and GM to look better than what they did! Then don’t forget those 40,000 electric cars obama wanted that nobody bought, except for the really Rich and Hollywood! So I can see obama fixing the books by saying, lets blame it on overseas sales, so it doesn’t make us look bad! OMG people, 41%? I can see whats coming! What you ask; how about one more Financial BaleOut, we’ll just charge it to the American people and they can pay for it! Anyone out there; if you were a CEO of a Bank, and I came in and told you the value of my company just fell 41%, would you loan me money? Do they not still owe us money? Don’t we own about 48% of GM? So if we own that much and it just went down 41% I think we “America” have just been shafted! Look for two things. obama handing them more money or Bankruptcy! I forgot, could this be More Union Pension’s and GM looking for more money to cover Unions? I see stink all over this! And someones cooking the Books!
Report Post »EWWGPDN
Posted on August 3, 2012 at 8:28amLocal, State, and Federal agencies can not keep buying new GM cars every year to prop them up. Just check which vehicles your Government has purchased in the last two years. You’ll see mainly GM. I can’t wait to see their US fleet sales numbers. My guess is they are way down.
Report Post »Flyingfish
Posted on August 2, 2012 at 4:54pmThey could build the best cars on the planet (they don’t by the way), but as long as the gov’t keeps playing games I WILL NEVER BUY A GM.
Report Post »SCREW-WINDOWS
Posted on August 2, 2012 at 5:49pmOnly owned 1 GM a Olds Toranado now that was a car but they don‘t build’em like that anymore so it’s Crown Vics for me.
Report Post »THX-1138
Posted on August 2, 2012 at 4:52pmI used to be torn between the big 2, GM and Ford. I’ve had Camaros and Mustangs among others.
That choice got easy for me though.
Right after the Fascist takeover of GM I went out and got myself a used 2006 Ford Crown Vic Police Interceptor (old Ga State Patrol car) and never looked back. I own the Interstate but I’m always going 10 under when I get behind someone on a two lane!
Worth it.
Report Post »Shakespear
Posted on August 2, 2012 at 4:30pmI did, but you won’t show it. What ever happened to “Freedom of Speech”???????
Report Post »Shakespear
Posted on August 2, 2012 at 4:28pmObama Motors is being run by incompetent people. Their engineers should all be fired, and all their lazy, arrogant employees let go, then shut the doors on this automotive Titanic. I wouldn‘t take one of their auto’s if it were offered to me free of charge. It’s JUNK people, don’t buy it!
Report Post »2SENSEWORTH
Posted on August 2, 2012 at 4:09pmThe only Volt I’ve ever seen is on a TV screen. Never seen one on the road. Interesting.
Report Post »johnpaulkuchtajr
Posted on August 2, 2012 at 4:47pmIt’s the car zooming down the highway on fire………..
Report Post »OniKaze
Posted on August 2, 2012 at 4:55pmYou know… SAME HERE…
But I live in Indiana… Even the dumbest people here are smarter than some of the most intelligent that live in places like CA, or NY (which are the people that the VOLT was made for)…. Since most all Hoosiers have SOME sense… Although I admit, I am baffled by Obama taking Indiana last election.. NEVER saw that coming..
Report Post »scuba13
Posted on August 2, 2012 at 11:29pmOnikaze are these the same smart people who kept Obama’s favorite Republican Dick “The Rino” Lugar in office for all those years?
Report Post »BOWRSTEVR
Posted on August 2, 2012 at 3:33pmOf course results are down in the US from last month, the government purchased a ton of fleet vehicles from GM in June. Can’t exactly inflate results every month by buying products from yourself!
Report Post »RWCT
Posted on August 2, 2012 at 3:46pmA backdoor to the FED is needed to get more $ in the hands of those buying GM vehicles. Maybe there can be 100 or so Chevy Volt CITIES. Of course Barry would need to get his EPA buds to back off on Coal Fired Power plants, to power these economic blackholes!
Report Post »OneShotPagan
Posted on August 2, 2012 at 3:25pmLet’s talk outsourcing … how is it Obummer says anything about Bain outsourcing jobs, when Government Motors is building plants in China? Not to mention the Jobs tzar building plants in China for GE … How many Volts does it take for his lights to go out?
Report Post »Jenny Lind
Posted on August 2, 2012 at 3:00pmOk, some of you don’t realize that GM is buying out retirees and paying one lump sum. As a widow I have been offered the buy-out and I am taking it. I think I can do better with the money. My hubby only worked for them around 12 years as a salaried employee, but I am gratefull for the small pension/buy out. I suspect they are not yelling this one time expenditure to the world. It will look crummy on their books for a time.
Report Post »SCREW-WINDOWS
Posted on August 2, 2012 at 5:32pmThats union logic offer a buyout so you can hire a replacement and end up having to pay both.
Report Post »docgreen
Posted on August 3, 2012 at 2:16amI think you just answered my Question! I just posted and thought it was obama playing tricks with the old balance sheet, and then the thought about Blaming it on overseas losses! As I was blogging, I realized the 3rd Idea. What if it was to pay off Pensions or Unions or maybe both? Now I understand! Is it possible GM is going to ask for more money, from obama to pay off more Union Employees? I‘m not saying people don’t deserve it, I’m just worried about the Unions and the fact that Michigan is one of those toss up states! This is Bad, so Bad that it reminds me of Solyndra and these Green Companies getting Money, Bonuses, Payed before the Govt. gets our money! Now I’m PO!
Report Post »OneTermPresident
Posted on August 2, 2012 at 2:34pmFord has a better idea….. Don’t take taxpayer money.
Report Post »thegreatcarnac
Posted on August 2, 2012 at 1:54pmGM has too much Union control. It will fail. Every year it will make more and more junk and sell more and more at higher prices. Thank you obama….you POS.
Report Post »netmail
Posted on August 2, 2012 at 3:40pmAnd just wait until delinquency rates on their paper go completely thru the roof. It will crush them like the bugs that they are.
Report Post »SCREW-WINDOWS
Posted on August 2, 2012 at 5:36pmYes that union quality control officer will really be policeing himself to do the right thing.
Report Post »Tri-ox
Posted on August 2, 2012 at 1:26pmWell, this is EXACTLY why democrats should pass legislation forcing all Americans to buy a Chevy Voltobamamobile. Come on democrats – just pass the bill and then ask Chief unJustice Roberts to give it his stamp of approval – What are you waiting for?
Report Post »THX-1138
Posted on August 2, 2012 at 5:00pmWhat‘s absolutely insane about this is that it’s now been determined by the Supreme Court to be completely legal.
We don’t need an election; we need to ammend the Constitution to allow States to leave this Fascist Government without being sumarily executed by them.
Or, we can keep doing this until all the rich have left OR JOINED OUR FASCIST GOVERNMENT.
Yeah, *that’ll* work out great…
Report Post »tcseacliff
Posted on August 2, 2012 at 6:55pmmaybe they are giving them away to mexico, and eric holder is waiting to ssee what happens to them??
Report Post »hauschild
Posted on August 2, 2012 at 1:23pmI’ll be shocked if GM is still in its current form within 7 years.
This company is a complete sham and anybody that perpetuates the sham by purchasing their products out to be ashamed of themselves, which I understand doesn’t happen these days, but my hopes remain high.
Report Post »ScottYaw
Posted on August 2, 2012 at 1:20pmThis is not a surprise. Out side of GM’s legacy costs and gigantic size, they have the same business strategy, general cost structure, unions and numerous models that don’t sell! They survive on government handouts and deals on cars. When that runs out – they will completely implode.
Report Post »red_white_blue2
Posted on August 2, 2012 at 1:31pmI can’t wait to see them fold. Let some new, truly innovative, motivated, young entrepenur get in there.
Report Post »johnjamison
Posted on August 2, 2012 at 1:35pmThey only way they’ll survive is to cut ties with the unions file chapter 11 which would free them from their labor,pension and health insurance cost via union contracts…Re structure-re train and re hire a new work force from the ground up. That and promise to pay back every single tax dollars they got from Obama and GM COULD BE ON THEIR WAY UP this time with the knowledge of what unions do to industry.
Report Post »jackact
Posted on August 2, 2012 at 1:19pmWho said, “Remember, I bailed out the auto companies to assist in our recovery”?
Report Post »Could it be…….Obama?
Why yes, I believe so.
It wasn’t about recovery was it America?
Crony capitalism is a dead end path and obviously very destructive to our nations economy.
Nothing, absolutely nothing, is too big to fail……
Amtrack
US Post Office
The Federal Reserve
Fannie and Freddie
Dept of Education
All municipal unions
Think about how much money we could save.
scrudge
Posted on August 2, 2012 at 1:19pmAh Yes….. buy a FORD you will live longer
Report Post »okredstate
Posted on August 2, 2012 at 1:17pmOUTSTANDING. Maybe they will file for bankruptcy
Report Post »TheBoracle
Posted on August 2, 2012 at 1:13pmI would like to see a sales breakdown fro the U.S. Curious to see if most of their sales are still to gov agencies.
Report Post »Anonymous T. Irrelevant
Posted on August 2, 2012 at 1:01pmWhat, the government doesn’t need anymore Volts? What do they do with the burned up cars?
Report Post »JRook
Posted on August 2, 2012 at 1:16pmGood thing Becket is never selective. Or did he miss Chrysler’s performance or the fact that GM still made a profit of $1.5 billion. Which of course is a tad bit better than what the situation would be if, as recommended by Romney, the company utilized the bankruptcy vehicle. Would love to see Becket do a piece on what the economic situation would look like if GM was not provided short term assistance.
Report Post »JRook
Posted on August 2, 2012 at 1:18pm“During the quarter, the company shifted its salaried pension plan to an insurance company annuity, and that cut pension income by about $200 million.“ Placing this type of information at the end of the report which of course provides some context to the performance report reflect the ”Truth with an Agenda” we have come to expect.
Report Post »Ben__Franklin
Posted on August 2, 2012 at 1:52pmFunny JROOK, Chrysler is still tied up in Bankruptcy and under protection. I know, my Company Supplies them. Get a clue, if they were doing so well, the TOTUS would be at their plants for photo-ops and mentioning them at every stump speech and everyone of his thousands of fund raisers while on the job for the taxpayers and ignoring his JOBS COUNCIL. This guy is worse than Carter and just shows what happens when a Marxist tries to lead a country – its an epic failure.
Report Post »THX-1138
Posted on August 2, 2012 at 5:08pm@JROOK
So then, you *are* in favor of Crony Capitalism? Having the Feds pick winners and losers rather than the People (aka The Market).
Interesting…
Report Post »pavnvet
Posted on August 2, 2012 at 12:56pmGM is run by a bunch of accountants and people that are not “car guys.” They are still arrogant and think they build a decent product…not. I started a 35 year career in the retail auto business with a GM dealership. By the late 80′s I had enough of their stupidity and went with Ford dealerships. What a difference in a company that still has family members involved. GM should never have been bailed out…they should have went through normal bankruptcy. What we did is keep the company afloat in Europe and China. Another reason Obama must go.
Report Post »the_system_disconnect
Posted on August 2, 2012 at 12:55pmI think that I will specifically not buy a new car just so they will fail. I will only buy prebailout used cars :P
Report Post »Individualism
Posted on August 2, 2012 at 12:55pmTheir cars are inferior to that of their competitors so what do you expect.
Report Post »Rothbardian_in_the_Cleve
Posted on August 2, 2012 at 12:50pmHuh? That’s not what their commercials say.
Report Post »Psychosis
Posted on August 2, 2012 at 12:49pmhey lefties
this is how you protest a company
hahahahahahahaahahahaahahahaha buy a ford !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Report Post »Constructionist
Posted on August 2, 2012 at 12:46pmThis is shocking news…. I was REALLY sure spending hundreds of millions on UK soccer jerseys was going to turn the company around.
Report Post »oicu814me2
Posted on August 2, 2012 at 12:53pmThey should have put that money in the chevy volt fire extinguisher company stock
Report Post »Ben__Franklin
Posted on August 2, 2012 at 1:59pmThey really should have invested in Extension Cord Companies so you do not have to unplug your Volt while you drive across country.
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