Today's Wall Street Journal (subscription required) has an article GM Reports Net Loss of $286 Million (again, subscription required). Despite having record sales, GM is still having difficulty.
General Motors Corp. reported a second-quarter net loss of $286 million, or 51 cents a share, as its core North American auto operations had a loss of $1.2 billion, disappointing investors who had bid up the company's shares in recent days after a strong June sales performance in the U.S.
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GM Chief Financial Officer John Devine yesterday offered little new on how GM plans to reverse the North American losses in the absence of major concessions by the United Auto Workers. The results come as GM has been in talks with the union for months, hoping to persuade UAW leaders to concede health benefits for hourly retirees and health-care workers.
That's the problem isn't it? How is GM going to reverse the losses in North America? While health-care concessions might offer a temporary reprieve, I doubt they will be a long-term solution. Should GM be successful in negotiating concessions, then so will be Chrysler and Ford. And the savings from those concessions are likely to be passed along to consumers as the auto companies continue to offer their rich incentive packages.
Greenspan also appears to be set continuing to raise interest rates. Those low or no interest programs will cost more. And at some point, the consumer is going to slow.
I believe this remains a very difficult and challenging time for GM.
I remain short GM stock.
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