GM to outperform the targets set in its earnings viability plan

Article by Christian A., on August 27, 2010

While we won't see the full picture until General Motors Co. reveals its third-quarter earnings report later this month, CEO Fritz Henderson claims that its situation is "more stable than what the outlook was even just two months ago."

Last April, GM outlined its earnings viability plan and now, Henderson is claiming that GM is outperforming the targets that it had set. We would have wanted to know the details and in which areas GM is outperforming but Henderson is reluctant to share the details.

He even said that he won't be confirming whether the carmaker is generating cash or not. The viability plan was presented to the government before GM filed for bankruptcy protection last June.

The plan worked with the assumption that GM would have a 19.5% share in 2009, with that share stabilizing in the 18.4% to 18.9% range in subsequent years. Instead of eight brands, that would come on the back of four core brands -- Chevrolet, Cadillac, Buick and GMC.

Saab and Hummer are being sold while Pontiac and Saturn will be winded down. Furthermore, the viability plan assumed that due to cost cuts, GM's North American structural costs would drop 25% from $30.8 billion in 2008 to $23.2 billion in 2010.

Henderson said that GM didn't know what would happen when it filed for bankruptcy and so it is possible that it has set the bar "exceptionally low." [via autonews]

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