GM makes $9.4 billion in global profits as it slashes thousands of jobs
By
Jerry White
8 February 2017
General Motors made $9.43 billion in global profits last year. The world’s third largest automaker generated most of its net income from its North American operations, which brought in $12 billion in pre-tax profits in 2016, up from $11 billion in 2015. The company lost money in economically stagnant South America and Europe, while profits remained flat in China.
Adjusted North American profit margins for the fourth quarter of 2016 rose to 12.1 percent from 10.5 percent a year ago, and full-year margins were 10.1 percent, down slightly from 10.3 percent in 2015. GM, like the other auto companies, has cashed in from brisk demand for highly profitable pickup trucks and sports utility vehicles in the US where gas prices and auto loan interest rates have remained relatively low. At the same time, GM has cut back on production of slower-selling passenger cars resulting in the loss of thousands of jobs.
Automakers have offered discounts and other financial incentives, long frowned upon by Wall Street, to maintain sales, which hit a record 17.6 million in 2016, up from 17.5 million in 2015. GM has made record profits from the pent-up demand during the Great Recession, which saw vehicle sales plunged to 10.4 million in 2009. The Obama administration’s bankruptcy restructuring of GM and Chrysler halved the wages of new hires and allowed the corporations to dump their retiree health care obligations and slash jobs so investors could profit even as auto sales slowed.
Despite the profit report, GM stocks fell 4.5 percent after the announcement, with investors anticipating that the global slowdown and growing inventories of unsold cars signaled an end to GM’s back-to-back…