Sunday, February 17, 2013

Presidents Day:GM flounders

Presidents Day: Government vacations, Islamists flourish, GM flounders | Washington Times Communities:

When I look through recent disclosures made by General Motors, I think of Monty Python’s John Cleese in the famous “dead parrot” sketch:
Looking at available “facts”, General Motors today is not technically “dead”—however, alarm bells are ringing off the hook.
In 2012, consolidated Automotive revenues grew by slightly less than 1 % from $ 148.9 billion to $ 150.3 billion. Automotive gross margin fell from a puny 12.4% in 2011 to 6.7%,
 in 2012. Operating income before goodwill impairment charges fell from $ 6.9 billion to an operating loss of $ 3.2 billion.
Pretax income after all charges plummeted from $ 6.0 billion to a staggering loss of $ 30.3 billion.
Moreover, these consolidated results were produced while the largest unit, GM North America, increased its capacity utilization rate from 95.6% to 97.5%.
No manufacturing business is viable at such levels for long and few American businesses have already been as coddled by various governments.
If you cannot sell/lease vehicles when money is essentially free, how can you hope to do so as rates correct back up as they have started to do since July 2012?
Analysis that is more complete will have to wait until the first week of March when GM releases its Annual Report on Form 10-K.
Rest assured that informed investors will not be celebrating even if entrenched unions, managers and politicians dare to gloat.
Bailing out a structurally challenged vehicle producer using borrowed taxpayer funds, without fully addressing competitive weaknesses has not restored the fortunes of General Motors.

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