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The General Motors recovery is starting to show some cracks. America's largest auto maker reported a fourth-quarter profit of $900-million (U.S.) on Thursday – pretty decent considering the losses it's taking in Europe. But unlike at rival Ford, GM's performance in North America was disappointing. The company's no lemon, but chief executive officer Dan Akerson needs to show that the last three months of 2012 were a blip.
Earnings before interest and tax for North America dropped almost 7 per cent compared with the same period in 2011, even though revenue increased by around 5 per cent. That left GM's EBIT margin for the region at 5.8 per cent. That's not bad, but it's the lowest GM has posted for several quarters and is way below the 8.4 per cent Ford cranked out.
It's also a mild concern that GM's North American market share dipped to 16.6 per cent, almost a percentage point less than in the last quarter of 2011. The company also gave more away to get vehicles off dealers' lots – an average of $3,500 per vehicle in December. That has echoes of the bad old days before the company's U.S. government-sponsored 2009 bankruptcy.
Of course, GM is now in much better financial and operational shape. And it may be that the extra incentives helped shift older models to make room for new vehicles launching this year – including trucks, the big money spinner. And Mr. Akerson himself is disarmingly honest in describing the company's turnaround as being in the early innings.
Nonetheless, the slip comes on the heels of other less-than-rosy news. GM's drive to be a bigger player in luxury cars has not yet turned into a roaring success. The Cadillac ATS won a car-of-the-year award, but sales have so far been slow. And while GM's new truck range has won plaudits, it was Ford's Atlas concept – not due to hit forecourts for another two or three years – that captured the imagination at last month's Detroit Auto Show.
One weaker quarter doesn't mean the new GM has derailed. Mr Akerson's task, though, is to make sure it doesn't happen often enough to cause too much doubt about the improving trend.