GM back in profit after cost-cutting drive

GENERAL MOTORS reported a billion-dollar turnround in its troubled North American car-making operations in the second quarter, thanks largely to the cost-cutting efforts put in place by its former supply chief, Jose Ignacio Lopez de Arriortua, writes Larry Black.

GM, which has lost dollars 17bn making cars in North America since 1991, now says its domestic automobile division should break even this year.

The results showed an overall profit of dollars 889m during the second quarter compared with a loss of dollars 703m for the same period last year.

But GM's finance director, Richard Wagoner, made pointed reference to its continued profitability in Europe despite weak market conditions.

The international automotive business made dollars 368m during the quarter compared with dollars 284m a year ago.

'I think we have done a pretty good job in Europe of improving our cost position and fighting any complacency,' Mr Wagoner said.

However, GM said that there were a number of uncertainties that could affect its recovery, including contract negotiations with its US employees and unfavourable economic conditions in Europe.