Bedfordtimesregister.com - GM boss expects 2010 profit

by Tom Krisher
Associated Press Auto Writer
Detroit (AP) — General Motors Co.’s chairman expects the automaker will be profitable this year and says hundreds of the 1,350 GM dealers who lost their franchises last year could see them restored.
Chairman and interim CEO Ed Whitacre Jr. also said that new Chief Financial Officer Chris Liddell is a candidate to take the CEO post permanently. And Whitacre said he’s not confident about selling the Swedish Saab brand.
In a wide-ranging talk with reporters at GM’s Detroit headquarters, Whitacre predicted that GM would be profitable this year, although he said that was dependent on the economy and other factors.
“Do we have obstacles in our way? Of course we do,” Whitacre said, adding he’s confident that GM’s management team has the company moving forward.
A full-year profit for GM, which left bankruptcy protection in July, would be the company’s first since 2004 when it made $2.7 billion. It has posted more than $88 billion in losses since then.
Dealers are getting a chance to regain lost franchises as a result of a congressionally mandated arbitration process that begins later this month.
The 1,350 GM dealerships, which were allowed to stay open until October 2010, were targeted as part of an effort to dump poor performers and better align its dealer base with much lower consumer demand for autos. In many cases, GM had dealerships too close to one another and were competing on price, the company said.
Congress passed legislation late last year that forces GM and Chrysler Group LLC, which shed 789 of its dealers last year, to give the dealers who lost franchises a chance to appeal the decisions. Like GM, Chrysler went through bankruptcy protection earlier this year and both companies are receiving government aid.
Whitacre said GM had a “pretty arbitrary cutoff point” for shedding dealers, and that it probably made mistakes in getting rid of some of them.
When pressed, he said his estimate of “hundreds of dealers” may be closer to 100 than a thousand, but added it’s a “substantial number.”
Restoring some dealerships could be good for the company because they would sell more cars for GM. But it also could be bad if a “lousy dealer” with a poor storefront got a franchise back, Whitacre said.
When the franchises were revoked last summer, GM officials said dealers were judged on whether they met sales goals, customer service scores, the condition of their buildings and other criteria. They were allowed to stay open through October of this year to sell their inventories.
Under pressure from dealer groups and lawmakers, GM and Chrysler put out proposals that would have allowed dealers to challenge closures in arbitration. But a bill passed by Congress allows them to bring a much wider range of proof that they are profitable.
Dealers have until Jan. 25 to tell the automakers if they will appeal.
AP Business Writer Stephen Manning in Washington, D.C., contributed to this report.