While the analysts foresee hard times for General Motors which has earned $4.7 billion last year, they say that the automaker’s momentum would not be so easy to safeguard. Having come up with its first annual profit in six years, the automaker has now come up after bankruptcy and the recession which it faced.
The automakers have posted earnings of around $4.7 billion last year which is but of course a dramatic turnaround. But as General Motors is at the end of a period which had augmented its sales due to the introduction of new cars, it is likely that future gains will be a little hard to achieve.
However the fourth-quarter profit for the nation’s largest automaker was found to be lesser in comparison to the earlier period. It too could not reach the expectations of the analysts.
Bill Visnic, an analyst said “Now the realities of a slow recovery for the broad global economy and formidable new competition are slowing GM’s sales and earnings, while the company also must deal with a relative paucity of new product launches in 2011”.
GM too might end up losing its boost which had come up as it had recovered from bankruptcy and recession as a result of the recent jump in gasoline prices. This is so as it would shift the mix of vehicles sold from high-margin trucks and sport-utility vehicles to less-profitable small cars.
Visnic further said that the profit in the fourth quarter which had come out to be less in comparison to the previous years was well enough a reason to state that momentum was hard to maintain.
In opposition to the loss of $3.5 billion, GM had reportedly made a quarterly profit of $510 million which was a year earlier in the same period. However the fourth-quarter earnings went down from $2 billion in the third quarter.
In the month of November, the shares had reportedly dropped from $1.57, or 4.5%, to $33.02, which was above the Company’s initial public stock offering of $33 a share. However one could not say that GM had not marked an outstanding turnaround in comparison to the 2005-to-2009 period, during which it lost $100 billion.
Dan Akerson, GM’s Chief Executive said that the last year had been their foundation building and that he was quite pleased with the GM’s ability to achieve sustainable profitability. And the most noteworthy thing was the bonus of $4,300 which almost 45,000 union workers were receiving.
Also the a 2009 bankruptcy and a government bailout too are somewhere responsible as they gave GM a chance to slash debt, cut employment, reduce health expenses, rewrite union contracts, winnow out surplus factories and dapper the cost of building a vehicle by several thousand dollars.