GM, Chrysler's New Ink Color: Black
The retooled General is cooking up a plan to finance a comeback -- and broaden its offerings.
The government takeovers of GM and Chrysler will bear fruit this year. Having shed billions of dollars’ worth of liabilities and shuttered outmoded manufacturing plants through bankruptcy proceedings, both companies are on their way to becoming much tougher global competitors.
They’re successfully transforming themselves into leaner, more efficient operations, with about a $2,000-per-vehicle cost advantage over Japanese and European car manufacturers -- at least on paper. That’ll let the two U.S. companies plow big bucks into new product development, spiffy interior designs and high-end technologies.
Despite a sluggish U.S. auto market -- likely under 12 million vehicles this year -- both GM and Chrysler should be in the black by the end of 2010 or so. After years of sustaining annual losses in the billions of dollars, Ford, which didn’t accept federal bailout money and skirted bankruptcy court, had a head start on new vehicle development and will likely post profits each quarter of 2010.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Giving GM’s new car development a lift: an initial public stock offering from the company, possibly this summer. The whole firm won’t be up for auction, though. Most companies prefer to dribble out stock sales, betting that share prices will rise, making subsequent offerings more lucrative. Moreover, the federal government, which holds 60% of GM, will likely hang onto its shares for a while, figuring taxpayers will get a better price for the stock later on. Still, even a limited public offering is expected to raise billions of dollars, making GM more competitive with other automakers, especially Ford.
GM’s stronger financial position will allow it to produce a wide array of niche vehicles, such as small sports cars, crossover SUVs and large cars, while simultaneously accelerating its development of big-production-volume passenger cars. The niche cars should prove to be profit centers for GM, says David Cole, chairman of the Center for Automotive Research, an auto industry consultancy. That’s a big change from the old GM’s modus operandi -- churning out hundreds of thousands of the same model in order to wring out a profit despite sky-high operating costs. And it’ll give GM a considerable advantage over its smaller, crosstown rival, whose new car development is just gearing up under Fiat after a two-year hiatus imposed by Chrysler’s previous owner, Cerberus Capital Management.
For weekly updates on topics to improve your business decisionmaking, click here.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
-
Sam's Club Extends A Popular Shopping Perk
Sam's Club has adopted a new policy on Sundays and holidays. Learn what it is and how to save on a membership.
-
The Ultimate Cruise Packing List for Retirees
Ready to set sail on your dream cruise? Here’s a no-fuss packing list tailored for older travelers to keep your trip stress-free.
-
Apple Readies for AI Upgrade with New iPhones
The Kiplinger Letter The tech giant has stumbled when it comes to artificial intelligence, but a new batch of iPhones will help it make headway.
-
Japan Enters a New Era of Risk and Reform
The Kiplinger Letter Japan has entered a pivotal moment in its economic history, undertaking ambitious policy and structural reforms to escape from decades of stagnation.
-
How Consumers Are Tinkering with Cutting-Edge AI
The Kiplinger Letter Companies launching artificial intelligence tools are jostling for consumer attention. Some products are already building a deep connection with users.
-
After Years of Stagnant Growth, Hope Emerges for EU Economy
The Kiplinger Letter Can a German fiscal push outweigh French political peril?
-
Small Businesses Are Racing to Use AI
The Kiplinger Letter Spurred on by competitive pressures, small businesses are racing to adopt AI. A recent snapshot shows the technology’s day-to-day uses.
-
How AI Puts Company Data at Risk
The Kiplinger Letter Cybersecurity professionals are racing to ward off AI threats while also using AI tools to shore up defenses.
-
AI Start-ups Are Rolling in Cash
The Kiplinger Letter Investors are plowing record sums of money into artificial intelligence start-ups. Even as sales grow swiftly, losses are piling up for AI firms.
-
What is AI Worth to the Economy?
The Letter Spending on AI is already boosting GDP, but will the massive outlays being poured into the technology deliver faster economic growth in the long run?