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GM sees drop in Q1 profits due to EU crisis

05-04-2012 15:40 BJT

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US car giant General Motors has reported a sharp drop in its quarterly profits. This was largely due to losses in Europe, and rising prices of components. Still, the company believes its prospects are good for the rest of the year, as Craig Mauro reports from Detroit.

General Motors beat many analysts’ expectations with its first quarter income, but the largest U.S. automaker’s profitability is still down compared to last year.

Europe continues to be the trouble spot, dragging down solid revenues in North America, China and elsewhere for the automaker that has turned itself around from near collapse a few years ago.

Aaron Bragman, Senior analyst of HIS Automotive, said, "They’ve got new products coming out that are being well received. They’re commanding more money for the products that they’re introducing because of the perceived quality and technology that they’re offering."

GM is also making more profit on each car it sells and does not have to rely as much on discounts, a result of streamlining its production and delivery processes.

John Mcelroy, President of Autoline Network, said, "3425 "By spending more money on the interior and nice materials and the kinds of amenities that people want in their cars, GM no longer has to discount as much. So the average transaction price on its vehicles is going up and that’s why the company is far more profitable today than it has been in the past."

Still, McElroy says, increases in raw material and component prices and ongoing trouble in Europe will force the company to stay lean.

Last year U.S. automakers posted phenomenal numbers, partly, according to some analysts, because the Japanese earthquake and tsunami set back manufacturers there.

Bragman said, "The comparisons that we’re going to see between this and last year are going to be a bit skewed because of that. We’ve seen the Japanese start to come back, we’ve seen their inventory rebuilt."

GM says it expects results for the second and third quarter to be comparable to the first. The company says it will continue trying to aggressively eliminate costs and it has 20 major vehicle launches planned worldwide this year, something it hopes will continue to drive revenue growth.

 

Editor:Zhang Jingya |Source: CNTV.CN

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