General motor
Summary
After three years bailed out by the federal government, General Motor Co. set a goal of making $10 billion a year which is an unthinkable goal. In 2012, GM report 2011 net income about $8 billion and its highest ever campare to 2010 with gain nearly twice which is $4.7 billion are growth in China and strong profit in North America. GM also aims over next several years to raise its profit margin to 10% from current margin of about 6% and would be among the highest in the auto industry. The bailout and restructuring helped GM shed nearly 40 billion in obligations to become debt- free and pay almost no federal corporate taxes for years as one condition of the bailout. Now, GM targeting to become the best-in-class peers referring to South Korea’s Hyundai Motor Co. and Germany’s BMW AG which both are estimated to have 10% return on sales for 2011.
GM faces some problem which are GM’s models are out-dated in South America, high labour cost and the high competition of market share. To achieve the goal, GM comes out with a few solution. For example fewer auto “platform” to savings out of its massive engineering budget, change its culture from focused on selling as many cars as possible.
At the beginning of 2011, GM executive offered plump incentives to increase the sales but soft profit in North America disappointed investors. In December 2011, GM’s executive discuss a strategy and they choose to cut incentives. As a result, GM’s sales fell 6% and be the only major auto maker to show a decline from a years ago. GM’s was losing the focus on market share or the profitability. GM’s slimmed down dramatically and it cut it’s a large number of global work force, union worker, closed plants, shed brands and trimmed its model line. According to GM executive, achieving a healthier margin becomes the main focus of the company and they are regained the title of world’s largest auto maker from Toyota recently after focusing on the profit and margins.
1)
After three years bailed out by the federal government, General Motor Co. set a goal of making $10 billion a year which is an unthinkable goal. In 2012, GM report 2011 net income about $8 billion and its highest ever campare to 2010 with gain nearly twice which is $4.7 billion are growth in China and strong profit in North America. GM also aims over next several years to raise its profit margin to 10% from current margin of about 6% and would be among the highest in the auto industry. The bailout and restructuring helped GM shed nearly 40 billion in obligations to become debt- free and pay almost no federal corporate taxes for years as one condition of the bailout. Now, GM targeting to become the best-in-class peers referring to South Korea’s Hyundai Motor Co. and Germany’s BMW AG which both are estimated to have 10% return on sales for 2011.
GM faces some problem which are GM’s models are out-dated in South America, high labour cost and the high competition of market share. To achieve the goal, GM comes out with a few solution. For example fewer auto “platform” to savings out of its massive engineering budget, change its culture from focused on selling as many cars as possible.
At the beginning of 2011, GM executive offered plump incentives to increase the sales but soft profit in North America disappointed investors. In December 2011, GM’s executive discuss a strategy and they choose to cut incentives. As a result, GM’s sales fell 6% and be the only major auto maker to show a decline from a years ago. GM’s was losing the focus on market share or the profitability. GM’s slimmed down dramatically and it cut it’s a large number of global work force, union worker, closed plants, shed brands and trimmed its model line. According to GM executive, achieving a healthier margin becomes the main focus of the company and they are regained the title of world’s largest auto maker from Toyota recently after focusing on the profit and margins.
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