POSTED: Saturday, July 31, 2010 - 1:36pm
UPDATED: Sunday, August 1, 2010 - 1:39pm
The auto industry was in the news this week, with crucial model introductions, a Presidential visit, and critics of the bailout having a field day. But away from the political spin, the fact of life for the Big Three are looking better.
It’s a problem of perception in Detroit.
General Motors and Chrysler were on the brink in 2008, and the outgoing Bush administration agreed to government loans to see them through the bad times, loans that the Obama administration turned into government shares in the companies.
"Today for the first time since 2004 all three u-s automakers operating at a profit," said the President in Detroit this week.
Ford had better timing, and was facing disaster in 2006 when it essentially hocked the entire company, all assets, to provide the capital it needed. As a result, Ford’s debt is higher, but it benefitted from widespread public goodwill for resisting a federal cash infusion.
“Last year,” Ford VP George Pipas says, “there were visible signs of Ford’s turnaround. It’s the first year since 1995 that our share increased.”
And Chrysler’s shotgun marriage to Fiat of Italy has allowed the company to pull itself out of bankruptcy into profitability.
All three are doing well this year with sales over a third higher than last.
Ford has just introduced a new Explorer based on a car platform with hopes it can save the SUV segment.
GM has announced the new Chevy Volt will carry a hefty pricetag of $41,000, but early orders are brisk and production is being increased.
Contrary to critics comments, the Volt was in process long before GM hit rough water, with the first auto show display models making the circuit back in 2006. It was not a product of administration pressure.
But it won’t be until GM announces it’s initial public offering later this year and sells off the government stake will it escape the stigma of the bailout.
“We still have some equity owned by the government,” Craig Eppling of GM communications admitted, “but we need a few solid quarters of profitability that will lead us into being able to go private again.”