GM's 2010 Profitability Brag Masks Its Thin Lead in Domestic Unit Sales, Subsidies from Overseas Profits

Toyota and Ford are on the verge of catching Government/General Motors in monthly U.S. vehicle sales. Based on the sales trends at the three companies, GM may lose its domestic kingpin status in just a few months.

I heard the December facts giving rise to the aforementioned tidbit on the radio Monday afternoon, and wondered whether the commentator came up with them on his own or if early wire reports had relayed them. If it's the latter, the relevant points seem to have disappeared from later wire service dispatches, including this one from the Associated Press's Tom Krisher and Dee-Ann Durbin. I think they need to be plucked from the ether and emphasized, especially given the boast by the GM's chairman that it will make a profit in 2010.

In December, GM's sales of its four "core brands" (Chevrolet, Buick, GMC, and Cadillac) barely edged out Toyota and Ford. Here are the numbers, referencing the Wall Street Journal's monthly vehicle sales report and subtracting non-core brand sales (Pontiac, Saturn, Saab, and Hummer) per the company's Tuesday media release:

206,670 -- Total GM Sales in December
14,687 -- "Non-core brand" sales
191,983 -- Net "Core brand" sales

187,860 -- Total sales at Toyota

178,063 -- Total sales at Ford

GM's core brand sales beat out Toyota and Ford by 2.2% and 7.8%, respectively. GM's press release claims its December core brand retail sales (excluding fleet sales) were up 13% over December 2008. Both Ford and Toyota registered total year-over-year December sales gains of over 30%. GM only has about 5,100 "non-core" units left to sell. It doesn't take a math whiz to see that GM's status as domestic sales leader is in serious short-term jeopardy.

This takes me back to GM's profitability promise.

The Wall Street Journal's Sharon Terlep and Neal E. Boudette abandoned the restraint usually practiced by Journal reporters and called GM Chairman Ed Whitacre's prediction "a bold and surprising forecast for a business that exited bankruptcy proceedings just last summer and hasn't turned an annual profit since 2004." Zheesh; the company walked away from about $30 billion in debt in the bankruptcy process and waltzed out of bankruptcy court after having received over $50 billion in government aid. The real question should be how the company could still lose money after getting such an unprecedented level of largesse.

If GM indeed achieves profitability in 2010, it will likely be because its profits overseas, especially in Asia, will exceed losses incurred in North America and Europe. After reviewing the company's "managerial income" information for the third quarter, the Associated Press reported that the company "earned $429 million before taxes and interest at its Asia Pacific unit, and $245 million in Latin America... and .... lost $651 million before taxes in North America and $437 million in Europe." Major players Toyota, Ford, Honda, and Nissan, along with and feisty smaller brands like Hyundai and Kia, continue to gobble up most of the increased volume arising from the U.S. economy's tentative attempts at recovery.

Why we're supposed to be impressed if GM really does make a profit on the backs of its Chinese and Latin American operations even after massively subsidizing its still bloated US, Canadian and European efforts, and how that achievement would justify the expenditure of tens of millions of taxpayer dollars during 2008 and 2009, are both mysteries to me.

Cross-posted at BizzyBlog.com.