Ouch! GM Plunges
16 March 2005
General Motors today forecast its largest quarterly loss since 1992, cut its estimate for annual profit by more than 50% and restated a 2004 fourth-quarter profit as a loss.
GM shares dropped 14%, the biggest decline since 1987, and S&P lowered its outlook on the company to negative.
Clearly we have significant challenges in North America. The rest of our automotive businesses, and GMAC, are running in line with, or ahead of, our expectations. But North America is our biggest business, and the key driver of automotive earnings and cash flow. So it’s important that we get this business right.—GM Chairman and Chief Executive Officer Rick Wagoner
GM’s U.S. sales dropped 10% in the first two months of 2005, resulting in the company having less than 25% of the market. Sales of its largest SUVs declined 28%, attributed by some to rising fuel prices. Toyota’s share rose to 13.1% percent from 12.1% in the first two months.
GM’s current market value is $16.6 billion—one-eighth the size of Toyota.
Can't say that I'm saddened by this. GM makes, in my opinion, the worse cars on the road.
Hopefully their reaction to this crisis won't be to deep discount their biggest SUVs.
Posted by: Mikhail Capone | 16 March 2005 at 09:12 PM
And so the transition to the age of expensive oil begins.
The really interesting thing to watch over the next 6 to 12 months is how much evidence comes out that various car companies were planning behind the scenes for the rise in oil prices. I suspect we'll see some companies looking fairly nimble in terms of downsizing cars and engines, or greater use of hybrids, to boost MPG, and others will struggle with the new economic realities.
Interesting times, indeed.
Posted by: loudGizmo | 17 March 2005 at 06:23 AM
G.M. and other American auto manufacturers are seeing the back side of all the lobbying they did to get suv's classified as trucks to avoid the mileage and emission standards imposed on regular passenger vehicles. So they enjoyed the much higher profit margins on suv's and flooded the roads with these gas guzzling , unstable vehicles that the general public bought for many reasons, not the least of which is self defense against other suv's. The end result will be the Japanese auto manufacturers beating us up again for the first time. The oil companies will raise the price of petroleum products, mostly because they can.
When will our legislators really start to represent the people and do something sensible instead of being influenced by lobby money?
Posted by: Joe B | 17 March 2005 at 05:17 PM
The only way to get away from paying this high oil prices is to move to alternative energy sources NOW! How are we going to do that without the infrustucture in place? We have to do it ourselves. People need to invest in diesel power and make your own biodiesel. If you want to drive your big SUV make ethanol to power it. We need to set up community renewable energy co-ops to produce our fuel. Our legislators wont do it for us. The oil companies wont do it for us. The auto manufacturers wont do it for us. We have to do it and we have to do it NOW. We don't have time to wait for change because it will never happen.
Posted by: king monkey | 18 March 2005 at 02:38 PM
Nice story! Can I use this for my blog? gr, remcowoudstra
Posted by: making biodiesel | 14 July 2008 at 02:06 PM