As GM Banks $2.5 Billion, N.A. Boss Eyes More

As GM Banks $2.5 Billion, N.A. Boss Eyes More

Conceding that the economic environment has a “huge amount of variability,” General Motors Co. president of North America Mark Reuss said he believes GM is well-positioned to continue an ongoing momentum highlighted by the company’s announcement Thursday it earned $2.5 billion in net income in the second quarter. He reiterated that GM is not changing its full-year Seasonally Adjusted Annual Rate of sales (SAAR) projection of approximately 13 million light vehicle sales for 2011, but added, “we’ve seen some wild things happen,” in the first half of the year and there’s nothing to prevent other unpredictable events that could potentially affect full-year SAAR.

Reuss also allowed that although GM has stabilized its market share in North America, he expects the Japanese brands, whose inventories were battered by constrained supply caused by Japan’s natural disaster in March, “to be back with a vengeance,” in the second half of the year. Speaking with the media at the Center for Automotive Research Management Briefing Seminars, Reuss also said that he doesn’t expect to get into an incentive war if the Japanese automakers attempt to regain ground lost in the first half by piling on incentives in the closing months of 2011.

“We have good pricing (at current incentive levels),” Reuss insisted. “It’s appropriate pricing.” Strong-selling current models, he said, will be backed next year by two all-new cars for the Cadillac luxury-car unit and an expansion of the e-Assist “light-electrification” hybrid system for the Buick brand. Reuss said the coming Cadillac ATS (above), a rear-wheel-drive or all-wheel-drive sedan on a new platform smaller than today’s CTS, should help GM attract more buyers in the millennial age group. The large front-wheel-drive/all-wheel-drive XTS, meanwhile, will present a new choice for older buyers who still desire fully contemporary electronic features and capability.

Shaking Free Of Government Motors
Although GM’s healthy $2.5-billion second-quarter income marked its sixth consecutive quarter of profitability, Reuss wouldn’t speculate as to when the U.S. Treasury Department might decide to sell its remaining equity in GM, obtained in exchange for billions loaned to GM prior to and following its 2009 bankruptcy. Chief rival Chrysler Group LLC – which also received billions of dollars in government bailout loans – made considerable political hay in May when it paid off the $7.6 billion it owed the Treasury Dept. by refinancing the debt.

GM’s share price has declined markedly since its initial public offering last year and the government has said it would prefer to sell its GM stock when prices are higher and recovery of its GM investment would be greater. Reuss said at the conference Thursday that he can’t control when the government might decide to sell its stake – nor can he exert much influence on the price of GM stock. “We want to drive returns for our investors. The only way I know how to do that is with results,” he said.

Bill Visnic:  is an AutoObserver Senior Editor. Follow @AutoObserver on Twitter