Excerpted from WSJ: Back to the Future: GM Bets on Trucks, Jan. 13, 2010
GM now is trying to boost revenue and return to profitability in a bid to repay the $6.7 billion in cash it owes the U.S. government. The Treasury Department also invested roughly $50 billion more in GM that was converted into a 60% stake in the auto maker.
The government has pushed GM, Chrysler — which also restructured in a federally financed bankruptcy — and other auto makers to produce smaller, more fuel-efficient vehicles, including battery-powered cars.
But, GM announced that it is using freed up cash to fund a major update of its full-size pickups, a bet that consumers and businesses will resume buying trucks after a long lull in sales.
GM, which had relied on full-size pickups such as the Chevrolet Silverado for a major portion of its U.S. revenue and operating profit, had put off redesigning the trucks as its finances collapsed and it underwent a government-backed bankruptcy reorganization last year.
Trucks sales sagged in the past two years after gasoline spiked to $4 a gallon in 2008 and home sales — a big driver of truck purchases by contractors and builders — collapsed amid the recession.
Until the past few years, full-size pickups had been a big business for Detroit car companies. They often sell for $30,000 and more and generate thousands of dollars in operating profit each.
“When the housing industry starts to pick up, you will see truck sales increase immediately and companies will need to have fresh products out there,”
Full article:
http://online.wsj.com/article/SB126334663717427135.html?mod=WSJ_hps_LEFTWhatsNews
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