General Motors’ new CEO Ed Whitacre said he believes the company will return to profitability in 2010
Speaking to reporters on a conference call, Whitacre, who assumed the top job on Dec. 1, gave the most bullish forecast yet for a turnaround in the company’s financial performance. The company has lost money every year since 2005 and was forced by the government to file for bankruptcy last year.
Asked if GM would be profitable this year, Whitacre said, “I’m hoping so. My prediction is we will be.”
Still, Whitacre cited uncertainty about the strength of the economic recovery and the battle to lure back customers who have soured on GM. “Do we have obstacles in our way? Of course we do,” he said.
But GM has said its financial conditions have improved enough in the past few months that it has already started to pay back the $6.7 billion loan it received from the Treasury Department as it exited bankruptcy. GM expects to complete payments by June. That loan is only a fraction of the $50 billion in help the company received from Treasury, however.
Whitacre added that GM hoped to return to profitability by focusing on sales growth as opposed to just slashing expenses.
“You can always take out more cost, but we are focused on the revenue side if you want to prioritize it,” Whitacre said.
He said the company is projecting an end to its long string of market share losses in the U.S. this year. GM has not had an increase in market share since 2002 and its market share has plunged from 44% in 1980 to under 20% last year.
Whitacre would not divulge the company’s market share target in 2010 will be but when asked if it was higher, he responded “Of course.”
GM is now privately held, with the Treasury Department holding 61% of shares and the United Auto Workers union and the company’s former bondholders holding most of the remaining shares. The company will need to go public again before taxpayers can start getting most of the money back.
Whitacre said he doesn’t think that it is necessary for GM to be profitable again before an initial public offering, although he acknowledged it would be helpful. He repeated earlier statements that the company will not be ready to go public until the second half of this year at the earliest, and added he feels no pressure to do so this year.
“We have to show our financial viability first. We have to get everything pretty well set up. People have to see us perform,” he said.
In other news, Whitacre said he anticipates “hundreds” of GM dealers who the company had planned to shed in the coming year would be retained by GM as part of a review process mandated by recently passed legislation.
During its bankruptcy, GM identified more than 1,000 U.S. dealers out of its base of 6,000 that it wanted to terminate, along with hundreds of other dealers who will be cut lose as the company discontinues its Saturn and Pontiac brands and sells or closes Saab and Humme