Thursday, April 01, 2010

Tracking the Wrong Car Figures

Wire reports and media outlets are busy touting that GM is selling more cars, as is Toyota and other carmakers.

That's the wrong metric to determine the fiscal health of the carmakers, particularly GM and Chrysler, both of which are shrouded in red ink despite emerging from bankruptcy protection last year.

What we need to know is whether the carmakers are making any profit on the cars they're selling and how much of a profit. That's the only metric that makes any sense and it's the only one that counts. If the carmakers throw rebates and other incentives to get people into showrooms to generate sales, it hits the bottom line.

GM was the world's largest car company in terms of sales figures, but it turned billion dollar losses year after year - forcing it into bankruptcy. Sales volume doesn't get the job done.

Profits do.

It's time that everyone, including the media, focuses on the bottom line because that's what counts and that is the only thing that will keep GM, Chrysler, and any other automaker from going under (again).

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