With massive losses encountered in the past years and the escalating competition in the auto industry, General Motors Corp. has to exert every effort to return to profitability.
Watchers in the industry say the Detroit automaker has to concentrate on the American market. And GM officials are aware of that end. GM Vice Chairman Fritz Henderson said last Tuesday that the company is still falling well short of a full-fledged turnaround.
"We've improved a lot from 2005. But if you look at 2005, it was a disaster," Henderson noted during an Automotive Press Association luncheon in Detroit. "Improvement is not the goal."
GM reported notable growth in some emerging markets such as Brazil, China and India. It is not enough, nonetheless. Time and again, GM has been growing in foreign markets, with 59 percent of its sales now outside America.
"We've got to get the job done in the United States," noted Henderson. "The emerging markets cannot carry GM."
The automaker is expected to be backed by its rigorous restructure strategies. But previous problems such as sales doldrums in North America, fluctuation, and escalating health costs continue to put a dent on GM's reputation.
It can be recalled that the automakers former lending arm inked steep losses in the past. More strictly observed, on the other hand, will be the company's operating margin in North America, where the automaker has racked up losses for nearly two years straight, according to the Detroit News. It's like the automaker is under giant , where close scrutiny is effortless.
"To turn those losses around GM will stick to the same strategy it laid out two years ago: toeing the line on less-profitable daily rental sales and discounts, while leveraging global resources to deliver must-have products," Henderson said. "This is not a business known for revolutionary strategy - it's about who executes best."
In America, economy is not expected to provide the indispensable help. Henderson said that he sees more potential for risk in 2008 than an economic upside, though he predicts a recession is unlikely.
GM has improved essentially every aspect of its business and is even making progress in stabilizing market share in the United States, the area in which the automaker has struggled most, said analyst David Healey of Burnham Securities.
"The stock market," concluded Healey, "is ignoring an $8 billion turnaround in their profitability."
