Almost a year after bankruptcies battered the U.S. auto industry, Detroit's carmakers are up and running again, faster than government officials and analysts anticipated.
General Motors Co. paid off the last $4.7 billion in U.S. loans yesterday, Chrysler Group LLC posted a first-quarter operating profit of $143 million. Shares of Ford Motor Co., the only one of the trio to avoid Chapter 11, closed today at the highest since January 2005.
"All three are much improved, and it's not fair to give all the credit to bankruptcy," said Brian Johnson, a Barclays Capital analyst. "In the desperate days of late 2008, they began making production cuts and product-line improvements. They've been remarkably restrained in incentives."
So-called quick-rinse bankruptcies cleansed GM and Chrysler of obligations with "unprecedented" swiftness, said Jeremy Anwyl, chief executive officer of researcher Edmunds.com. Chrysler filed for court protection April 30 and exited June 10. GM emerged from bankruptcy on July 10, 39 days after entering.
"Despite all the naysayers, you have to look at GM and Chrysler and say their chances of survival are markedly better because they did go through bankruptcy," Anwyl said. "And Ford benefited as the company that didn't go through bankruptcy."
Now, the automakers' strategy involves paring costs while overhauling their lineups to boost fuel efficiency and quality.
New Models
Ford is pushing its Fusion hybrid as an alternative to Toyota Motor Corp.'s Prius, the top-selling gasoline-electric auto. GM CEO Ed Whitacre said yesterday the plug-in Volt will be introduced in October, a month earlier than promised, while Chrysler said it has 16 "all-new or refreshed" models in 2010.
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