Thursday, May 01, 2008

General Motors Faces $ 3.3 Billion First Quarter Loses

In my earlier article, I wrote about General Motors’s 24 percent sales increase in Indian market in the month of April. If that is the ray of hope for General Motors bosses, then GM’s first quarter loss of 3.3 billion dollars due to US sales being gone down has become a serious cause of concern for the company.

You know that US economy is going through a recession period and it has affected the US auto market. So, almost all the automakers are struggling in the US market. However, the good news for GM is that the amount loss they faced in the first quarter was far less than what analysts expected. GM projected total revenue of 42.7 billion dollars, a slight fall from 43.4 billion. GM has also decided to cut back its pickup truck production and sport vehicle due less demand in the US market because of price hike of gasoline. However, the car maker maintains its excellent growth in other continental regions including Europe, Asia pacific, Africa and Middle East.

AFP reported:

"The results may not be immediately comparable to the more sizeable loss analysts were expecting, but are still attracting attention" from investors, analysts wrote in a client note.

The struggling automaker said it had combined earnings before taxes of one billion dollars in GM Latin America, Africa and Middle East (GMLAAM), GM Asia Pacific (GMAP) and GM Europe (GME), which more than offset a loss at GM North America.

"We continue to leverage our global product portfolio to take advantage of tremendous growth in key emerging markets, while at the same time taking the appropriate actions to deal with the challenging economic conditions in the US," said GM chairman and chief executive Rick Wagoner.

General Motors is now facing a strong challenge from Japanese car maker Toyota. In fact, in the first quarter GM fell behind Toyota. So, even though GM has a strong presence in the other parts of the world, GM must improve its sales in the US market if the auto giant wants to hold on the top position in the automobile market.