GM turns 2012 profit despite losses in Europe

Published on NewsOK Modified: February 14, 2013 at 4:13 pm •  Published: February 14, 2013

The accounting change means that GM will return to a 35 percent tax rate, up from the mid-teens last year. It still won't pay U.S. federal income taxes for many years due to the write-offs. Tax payments in cash will remain at a 10 percent rate for the global company.

GM shares closed down 92 cents, or 3.2 percent, at $27.75.

The earnings in North America also mean big bucks for GM's 50,000 U.S. factory workers, who agreed to take profit sharing over pay raises in 2011 contract talks. The workers represented by the United Auto Workers union will get $6,750 each, down a little from $7,000 last year.

Record sales in China also helped GM in 2012, and GM said that should continue this year. The company gained a point of market share in China last year, and in January, sales topped 300,000 vehicles in a single month for the first time.

Despite the big profits in North America, GM is showing signs of weakness there. Its North American pretax profit fell 3.3 percent from 2011, but Ammann said it would have gone up if not for an $800 million drop in pension income. Also, GM's share of the U.S. market dropped almost two percentage points from 2011, to 17.5 percent. And its sales aren't keeping up with the industry's growth. Last year, total U.S. auto sales rose 13 percent, but GM's went up only 4 percent.

Akerson has said he expects GM to post a modest market share gain this year with total U.S. sales expected to rise from 14.5 million in 2012 to more than 15 million. At more than 15 million, the sales are almost back to what analysts consider normal levels, but they're still far short of the recent peak of almost 17 million in 2005.

Because of the losses in Europe, neither GM nor Ford can afford problems in North America, said James Albertine, an auto industry analyst for Stifel Research. "The story for North America essentially has to be airtight," he said.

But he predicts that GM will have an impressive year because of the new vehicles that are coming out, particularly the new pickup trucks, the Chevrolet Silverado and GMC Sierra. The Silverado is GM's top-selling vehicle, and the new version will arrive in the middle of a year in which pickup sales are expected to rise.

"Some of their key products are going to have a lot of momentum," Albertine said. "Overall I think they'll do a good job holding the progress that they've made to date."

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