GM chief Edward Whitacre says profit possible this year
General Motors Co. could make a profit this year following years of massive losses, according to a tempered prediction by Edward J. Whitacre Jr., the automaker’s chairman and interim chief executive.
Speaking to reporters Wednesday, Whitacre said he was “pretty pleased” with how the restructured GM was operating after its emergence from bankruptcy in July.
But he noted there was much more work to do -- primarily in persuading consumers that GM makes “quality” vehicles that are “cool to drive.”
A profit, after five years of losses, would be important to GM’s ability to float a stock offering to repay some of the $52-billion investment and loans the federal government has poured into the company over the last year. The government has converted much of that into a 61% stake in GM and received a $1-billion payment last month from the company on its remaining $6.7 billion in loans.
“If it is in 2010, it is going to be late in the year,” said Whitacre, former chairman of AT&T Inc. “Things have to be right before we can do it. . . . We have to show our financial viability. People have to see us perform.”
The key to making a profit is “selling more stuff,” Whitacre said.
GM has made large gains in reducing the cost of building autos and now has to focus on growing revenue, something Whitacre said should be possible as the economy improves.
Whitacre said he agreed with the industry estimates that auto sales would grow about 10% this year to about 11.5 million vehicles. But he cautioned that there were many risks that could upend that forecast as well as GM’s ability to crawl back into the black.
“It is an unsettled economy with a lot going on,” he said.
In a wide-ranging discussion, Whitacre also said that GM could restore “hundreds” of 1,350 dealers that it planned to close over time as part of its restructuring. The plan met with an angry backlash from lawmakers and residents in the communities in which the dealerships were located. Before its bankruptcy filing, the company had 6,200 dealerships.
In December, Whitacre, 68, became temporary chief executive after the board pushed out Fritz Henderson and launched a search for a permanent replacement. One possible successor would be Chief Financial Officer Chris Liddell, who was hired from Microsoft Corp. last month.
“Chris could be a candidate. That will be up to the board and his performance and how things go in the upcoming months,” Whitacre said.
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