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For GM, it’s a whole different world

LINDSAY CHAPPELL
For GM, it’s a whole different world
Automotive News | August 4, 2011 – 3:49 pm EST

Today’s second-quarter earnings report from General Motors evoked a Tom Hanks moment.
In the 2000 movie Cast Away, Hanks’ character, Chuck, finally gets off the desert island where he was stranded and makes it back to Memphis, only to find his world altered beyond recognition.
Chuck’s girlfriend, Kelly, is now married with a child.
“So let me get one thing straight,” says an emotional Chuck, standing in Kelly’s kitchen and struggling to make sense of the new order.
Flash forward to GM’s earnings report: $2.5 billion in profits, thanks largely to the U.S. market.
Maybe the past doesn’t count for anything any more. But it is worth recalling that for some considerable time in modern history, GM struggled to make a profit.
It was weighed down largely by an over-reliance on the U.S. market, at which its global competitors continued to chisel away. And it was thwarted in the U.S. market historically by its inability to make decent small cars at a profit — especially in very recent years when consumers shifted from trucks and SUVs to smaller cars and crossovers.
So troublesome have small cars been to GM that the company’s strategy was to source products from a long line of Asian competitors including Isuzu, Toyota, Suzuki and Subaru.
This is where Chuck returns from the desert island and steps dumfounded into the new reality of GM’s kitchen.
“So let me get one thing straight,” he begins.
GM didn’t merely make $2.5 billion in profits. It made it by doing really well in the U.S. market. And it did well here, in large part by selling a lot more small cars and crossovers, such as the Cruze and the Equinox. And it is making profits on them not by importing them but by building them in North America.
Suffice it to say that this is not the same GM we knew when we washed up on the beach of that island.

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