General Motors, the American maker of automobiles, is set to file an IPO tomorrow on the U.S. stock market as it continues its post-bankruptcy renaissance. How did GM go from near insolvency to potentially having the largest global IPO in U.S. history? The company asserts that through effective supply chain management and an emphasis on strategic sourcing, it attained profitability.
Paradoxically, GM managed to log massive losses during the boom years of America's car-buying spree – the mid 2000's – while recently it has recorded profits as the industry suffers through a global recession. Newly reported third quarter results show a $2 billion profit from July to September, the company's third consecutive quarterly profit. GM is gambling on demand for cars in China, where it just became the first car company to sell more than two million cars.
GM's chief, Dan Akerson, asserts that the company has cut costs and trimmed its car lineup. As older workers retire, many will be replaced by new ones who will earn substantially less. Because of this cost reduction, GM stands to close the per-car cost gap with Asian carmakers. Moreover, the company's newly designed cars, especially its crossover SUVs, are selling well. After its bankruptcy filing, GM quickly reduced its brand holdings, downsizing to only 4 – Buick, GMC, Chevrolet and Cadillac – once again saving money.
GM hopes its profitability will continue amid global competition and rising commodity costs.
Paradoxically, GM managed to log massive losses during the boom years of America's car-buying spree – the mid 2000's – while recently it has recorded profits as the industry suffers through a global recession. Newly reported third quarter results show a $2 billion profit from July to September, the company's third consecutive quarterly profit. GM is gambling on demand for cars in China, where it just became the first car company to sell more than two million cars.
GM's chief, Dan Akerson, asserts that the company has cut costs and trimmed its car lineup. As older workers retire, many will be replaced by new ones who will earn substantially less. Because of this cost reduction, GM stands to close the per-car cost gap with Asian carmakers. Moreover, the company's newly designed cars, especially its crossover SUVs, are selling well. After its bankruptcy filing, GM quickly reduced its brand holdings, downsizing to only 4 – Buick, GMC, Chevrolet and Cadillac – once again saving money.
GM hopes its profitability will continue amid global competition and rising commodity costs.
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