GM CEO Says Company Can Make a Profit in 2010

gm-ceo-says-it-can-make-a-profit-in-2010Ed Whitacre, the former telephone executive who is now chairman and interim CEO of GM, said Wednesday that the No. 1 U.S. car company can make a profit sometime this year. Whitacre also said that he expects his firm to repay its $6.7 billion government loan by mid-year. Longer term, he believes GM can have an IPO in 2010 to help repay part of the money that taxpayers spent to buy 60% of the vehicle manufacturer.%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% Whitacre might want to be more circumspect. A number of auto-industry analysts said that aggressive predictions about GM's future helped cost Whitacre's predecessor, Fritz Henderson, his job. And, Whitacre's predictions could turn out to be faulty for a number of reasons.

GM faces two huge hurdles. The first is that the U.S. car market may not rebound much in 2010. High unemployment and poor access to credit are still keeping buyers out of showrooms. Many consumers pressed for cash are simply hanging onto their old cars longer, on the assumption that it is less expensive to make minor repairs than to buy a new vehicle and face years of monthly payments.

GM also has to contend with Ford (F) and Toyota (TM). Each posted a sales increase of over 30% in December compared to the same month in 2008. Both have substantial access to capital and have a number of small, fuel-efficient cars already on the market. Toyota and Ford are taking domestic market share from GM, and there is no reason to believe that the trend will not continue in 2010.

Whitacre may rue the day he decided to predict GM's future.
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