By on February 23, 2011

Analysts are reporting that GM could announce full-year 2010 profits of over $5b tomorrow, although Q4 profits may have dipped to $1.06b. That would make its full-year results the best since a $6b profit in 1999, but Q4 results could be the second-worst since emerging from bankruptcy. Why the slowdown? Analysts give Bloomberg a number of possible explanations, including

  • GM’s spending on cars including the Chevrolet Volt plug-in hybrid and future products may lead to higher costs similar to those that restrained profits at Ford and Daimler AG.
  • Automakers are paying more for materials such as steel and are struggling to pass the costs to consumers amid a “somewhat weak” economy
  • Restructuring unprofitable European operations

Of all these dynamics, however, CEO Dan Akerson’s rush to revamp GM’s lineup and expand the applications of the Volt’s drivetrain could end up driving the most cost. Though GM is making a healthy profit again (and not paying taxes on it), an overly-ambitious speed-up in product cadence could combine with rising costs to slow The General back down (as they have already done to some extent at Ford). In any case, we will certainly have a better picture of GM’s financial performance tomorrow, when the firm’s results are announced.

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3 Comments on “GM Profit Projections: Over $5b On The Year, But “Pinched” Q4...”

  • avatar

    For the last few years, quarterly reports seem chock full of accounting gimmicks and nothing like an honest, predictable progression one would expect of a mature company in a mature market.  Other than gamblers or people with insider knowledge, who would “invest” their money with this company?

  • avatar

    Where is our money – payment plan back to “We The People” sucks.

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