897 million of 1.2 billion overall profits !


See: http://www.forbes.com/feeds/ap/2004/...ap1461195.html



Is that typical for the auto industry ?

Wow !


Britt

 

All that $897 mil. profit comes from interest on cars/houses/etc. alone right?

 

No, Just GM and Ford. They've relied heavily on their financing arms for much of their profits lately.

I think both of them have invested lots of $$$ into new products as of late, and so profits from these investment probably won't show for atleast a few model years or till they're paid for.

 

Yep. Chrysler's trying to get in on the action by offering $1000 cash back by using their finance arm when you buy a new Chrysler.


I still wouldn't expect GM to make huge profits from their automotive arm unless there is a HUGE change in mentality there.

Both Ford & Chrysler are also planing alot of new products. The difference between them & GM is that they are weening themselves off of incentives, and are more willing to increase profits at the expense of market share. GM on the other hand is game intense on keeping their factories humming and market share gaining even if they lose money via "skys-the-limit" incentives, with their finance arm making up the difference.

Also, Chrysler & Ford are inherently set up to make more money than GM. GM currently spends less money than anyone else to assemble a car, but GM also spends more money than everyone else to get a car to market & to sell that car than anyone else because of the multiple designs of each model & the multiple divisions each model is marketed through.

Ford can spend a certain amount of money to design a Taurus, & sell 300,000 per year last year. Yet GM has to design & market the W body through 3 divisions to equal that total. Those involved have a paycheck, benefits, pensions, etc. Chrysler's in a similar position.

GM is always going to be the high spender, and because of it's size, will always be the slowest to respond. However, in GM's favor is it's mass and sluggishness makes them less prone to take high risks or missteps, therefore is far more stable.

 

With rates going up, though, those profits will drop fairly quickly. It was definately good while it lasted.