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GM Forecasts Profits to Rise in 2014

Maker credits new vehicles and general growth in global auto sales.

by on Jan.15, 2014

GM President Dan Ammann during the unveiling of the new Corvette Z06 on Monday.

With a new management team today taking office, its first dividend planned in nearly six year, and its stock already on the rise, General Motors has yet more news likely to make investors happy, the Detroit maker forecasting that its earnings are likely to rise “modestly” in 2014.

The maker credits a variety of factors that include an improving outlook for the overall global auto industry – but primarily due to a wave of its own new products that it hopes will yield increased sales and market share in key markets.

Automotive Insight!

“We continue to perform well in the two most important markets in the world, the U.S. and China,” said Mary Barra, who took over as GM’s new CEO today. “We’re taking advantage of our strength in these countries to restructure and make the investments necessary to grow profitably in other parts of the world.”

New GM CEO Barra.

GM’s year has clearly gotten off to a good start – though there are still plenty of challenges facing the maker.

Perhaps the most significant – but still untested – development comes with the appointment of Barra, the first woman to serve as the chief executive of a major automaker.  She replaced Dan Akerson, who stepped into that role in 2010, not long after GM emerged from bankruptcy protection with the help of a nearly $50 billion federal bailout.

The U.S. Treasury last month sold off its last shares in the automaker, freeing GM up to declare its first dividend since 2008.  The maker also announced yesterday a new chief financial officer, Chuck Stevens. He replaces Dan Ammann who was promoted to GM president as part of the company’s broad management shift.

(For more on GM’s new CFO – and its restored dividend, Click Here.)

Ammann outlined the maker’s upbeat earnings forecast during the Deutsche Bank 2014 Global Auto Industry Conference in Detroit.

“In 2014, our focus will remain on winning customers by delivering new vehicles with compelling value and outstanding quality,” Ammann told investor analysts. “Our ongoing work to transform our company into a formidable competitor in every market we serve will continue unabated.”

(Ammann helps roll out new Corvette Z06. Click Here to check it out.)

Ammann noted that the maker launched 18 new vehicles in the U.S. alone last year and will add another 15 for 2014.  Along with its joint venture partners, meanwhile, it plans to introduce 17 new or upgraded models in China this year – while an additional four assembly plants will come on-line in the booming market by 2015.  China is already GM’s largest global market and by the end of next year it expects to have enough capacity in place there to produce 5 million vehicles.

It’s not the first time the maker has launched a major product blitz – but several that led up to its 2009 bankruptcy failed to yield the hoped-for boost in sales.

There are signs it may do better that time.  After slipping in market share since before its plunge into Chapter 11, GM picked up a half-point in 2013, and its upscale Cadillac brand was the fastest-growing luxury brand in the U.S.  It helped for Caddy to win the coveted 2013 North American Car of the Year trophy while influential Consumer Reports magazine named the new Chevrolet Impala the best sedan it had ever tested.

(Check out TheDetroitBureau.com’s complete coverage of the 2014 North American International Auto Show by Clicking Here.)

This week, the Detroit Auto Show got underway with GM sweeping the 2014 North American Car and Truck of the Year awards with its Chevy Corvette and Silverado models.

But GM’s new year won’t necessarily be a slam-dunk.  The maker’s new management team has to prove it can gel and, if anything, increase 2013’s momentum.  The maker is facing increasing competition in China where rival Volkswagen surged past GM to become the market’s sales leader last year. And there is the issue of Europe, which has racked up billions of dollars in losses since 1999.

But a new turnaround plan developed by now-retired Vice Chairman Steve Girsky is beginning to show some positive signs and the losses could shrink if, for no other reason, the European market finally begins to revive after its worst downturn in decades.

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