Word: gm
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Dates: during 2000-2009
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...GM's baseline projection for 2009 is industry sales of 12 million cars and trucks - a steep decline from the 16.5 million units sold in 2007, and even from the 13.7 million expected in 2008. Recovery will come slowly. GM projects that industry sales will reach 14.5 million units in 2011 and 15 million units by 2012. As it points out in its restructuring plan, "This is significantly below the 17 million-unit industry levels averaged over the last nine years...
...downside outlook is even gloomier: 10.5 million units next year, growing to only 12.8 million in 2012. That's right around break-even for a restructured GM...
Even if sales do rebound, GM's opportunities for significant profits will be sharply reduced. It has shuttered several truck and SUV plants and will be switching production to small cars, where GM has traditionally had trouble making money...
Here's one example of the challenges that GM faces. It is investing $750 million in the Chevrolet Volt, a range-extended electric vehicle that is supposed to get 40 miles on a charge of electricity. It is a major technological achievement, but analysts figure that the cost of the extra batteries in the Volt will raise its price to around $40,000. Since sales volume will be very small, GM will lose money on every one. Volt will be great for corporate egos but lousy for the bottom line. (See the Top 10 Bailout Measures...
...days, $750 million was enough to develop a new Cadillac Escalade that would return a variable profit of $10,000 a vehicle. No more. For a restructured GM, the opportunities to produce a return on investment will be a lot more challenging than in the past...