Can GM Cut Costs Without Cutting Quality?

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In the bad old days, "cost cutting" at General Motors (NYSE: GM  ) meant cheap-feeling cars that GM had to sell at cheap prices -- with little profit. We know where that led: bankruptcy court.

Now, GM is once again embarking on a global cost-cutting campaign. Is it really different this time? Fool contributor John Rosevear recently got the inside scoop. In this video, he explains what GM is actually doing -- and why it might mean big things for GM's profits.

Read/Post Comments (6) | Recommend This Article (2)

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  • Report this Comment On June 17, 2013, at 6:44 PM, Gettinitagain wrote:

    A company that has already had billions in debt relief, and still has to cut to make a profit? Why is this company even around?

  • Report this Comment On June 18, 2013, at 12:36 AM, pwkrp wrote:

    @gettinitagain, maybe you should read the news and see how GM stock it up, car sales up, the bailout has been paid back, and GM is buying stock back from the government and the USA will make money on this and will be finished buying the stock in 2014.

  • Report this Comment On June 18, 2013, at 12:48 AM, dwduke wrote:

    I think GM will be offering a pension buyout for union retirees soon. That fund has $71 billion in it, but is $10 billion short of funds. As more baby boomers retire it will mean more profits going into the retirees kitty. GM can't sustain this. Car sales will slow down and GM had better be ready for the next downturn. Obamanomics means no rubust economy and little growth.

  • Report this Comment On June 18, 2013, at 6:50 AM, TMFMarlowe wrote:

    @dwduke: GM's CFO Dan Ammann says that it all depends on interest rates. If interest rates go up, that pension shortfall will shrink. They may look at doing something like what they did with the salaried plan at some point, or they may just leave things as-is while making sure there's no long-term shortfall. They can afford it now, and they're on it. The folks who run GM now are a *lot* sharper and more sophisticated about this sort of thing than the old crew ever was. It's not a big worry from my perspective, but I should probably write an article explaining the whole deal -- Ammann talked about it at some length in an analyst conference last week, and it's probably worth going over what he said.

    @pwkrp: What you said. It's hard for many people to see, but this is a very different GM now. Give them a year and a half to finish rolling out all their new models, and we'll see how much they've learned. (And if you don't think GM has changed in the last few years... go test-drive a Cadillac ATS. Wow.)

    @Gettinitagain, what @pwkrp said.

    Thanks to all for watching.

    John Rosevear

  • Report this Comment On June 18, 2013, at 6:57 AM, edenstreet wrote:

    to all, the old GM with held millions of us dollars from investors in the form of secured bonds. this investment was and is still owed, but our govt. felt the new GM not responsible.

    PS I just bought my first Ford car.

  • Report this Comment On June 18, 2013, at 7:14 AM, TMFMarlowe wrote:

    @edenstreet: GM's wasn't a typical bankruptcy, but... that's how bankruptcies go, unfortunately. It's a shame that GM was run into the ground, but at least the crew that took the place over is doing pretty well with it.

    My feelings for the bondholders are decidedly mixed... it was clear for a few years before the bankruptcy that GM was headed for serious credit trouble. Anyone holding GM bonds at bankruptcy was either speculating or not paying the kind of attention that one should be paying to their investments.

    John Rosevear

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