GM’s $6.3 billion first-half profit wasn’t good enough, says CEO

Article by Christian A., on November 9, 2011

In the first half of the year, General Motors Co. recorded a profit of $6.3 billion (the highest in at least two decades). However, CEO Dan Akerson wants to have additional cost reductions to demonstrate to employees that this figure isn’t good enough.

In the past few months, Chief Financial Officer Dan Ammann presented statistics that suggest that more cuts are required since GM's 6% margins (computed by Morgan Stanley Investment Banking using earnings before interest and taxes) lead only earthquake-affected Toyota Motor Corp. and French firms Renault SA and PSA Peugeot Citroen.

GM spokesman Jim Cain said that it seeks to surpass the 7% margins of Ford Motor Co. and Volkswagen AG and that it is on track to be the leader in global sales once again. Ammann and Akerson are focusing on examining product programs, making the most of marketing spending and working to consolidate the lineup of engine and vehicle platforms used for its cars.

Adam Jonas, an auto-industry analyst at Morgan Stanley, said that the margins of Ford's North American margins are “easily two percentage points better than GM's” but he believes that this gap could become narrower.

Bloomberg data reveal that in the first six months of the year, GM posted a 5% operating margin while Ford had 7.5% and Volkswagen had 7.8%. We’ll get to know just how much progress has been made when GM reveals its third-quarter earnings. [source: Autonews]

Topics: gm, ceo, profit

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