For GM, It's Good News And Bad News

While profits at GM continue to rise despite a sharp increase in gas prices, much of the increase has come from selling smaller cars, like the Chevy Cruz. That's the good news. The bad? There's a huge recall of the Cruz because of transmission and other problems.

Copyright ? 2011 National Public Radio?. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

MELISSA BLOCK, host:

It was supposed to be a great day for General Motors. The company released its first quarter earnings. Profits jumped to more than $3 billion, but GM was busy today with a public relations setback. It had to recall more than 150,000 Chevy Cruzes. That's its top-selling car.

As Michigan radio's Tracy Samilton reports, GM's future depends on the success of fuel-efficient cars such as the Cruze.

TRACY SAMILTON: Technicians in the service bay at Chevy Suburban in Ann Arbor are pretty busy today, fixing a bunch of cars, a van, some trucks. But the vehicle that catches your eye is the bright yellow Hummer going up on one of the lifts. A reminder of GM's past when profits rose or collapsed on the strength of SUV and truck sales. But these days, salesman Scott Northway is dealing with customers in the showroom who are anxious about the price of gas. He steers a lot of them to the Cruze Eco.

Mr. SCOTT NORTHWAY (Salesman): It has got the 1.4-liter turbo engine, six-speed manual transmission. It's like a performance car that gets 42 miles per gallon. It's remarkable.

SAMILTON: Northway isn't too concerned about the recall. No one's been hurt as a result of the potential problems in the car's transmission and power steering. Every car company issues recalls, he says. But he's seen a big improvement in the overall quality of GM vehicles in the last five years.

Mr. NORTHWAY: When I first started here, you know, yeah, there were -and it's just stuff that you can see, you know, turn(ph) pieces that are improperly installed, and you just kind of to pop them in or whatever. And you don't see any of that stuff anymore.

SAMILTON: While the recall covers almost all the Cruzes GM has built so far, that's not a huge number, and Chevy dealerships probably aren't going to be overwhelmed by the work. GM says it expects to find very few cars with actual defects. Still, as Michelle Krebs of edmunds.com puts it...

Ms. MICHELLE KREBS (Senior Editor, Edmunds.com): No recall was ever good.

SAMILTON: And Krebs says this recall involves what may be the most important vehicle GM has introduced in the past three years. The Chevy Volt may be getting all those splashy headlines, but sales of the Cruze could make some real money, and GM can't afford a replay of 2008 when gas prices spiked and earning sank because GM's smaller cars weren't doing well in the market. Krebs says, in one respect, the Cruze recall is encouraging because it was swift and complete.

Ms. KREBS: I think a lot of this goes back to the lessons learned from the Toyota recall, and companies are getting out in front of these early.

SAMILTON: Most recalls don't make much of a dent in sales. GM hopes that's the case here. The Chevy Cruze was outsold in April by only one other competitor - the time-trusted Honda Civic. Other fuel-efficient GM vehicles like the Crossover Equinox also outsold many competitors. Oh, and about those earnings, yeah, $3.2 billion. That sounds pretty good. But that number includes $1.5 billion in one-time gains from when GM sold some holdings in other companies. The overall earnings were not dramatic enough to pump up the company's stock price today, and that matters because the U.S. Treasury isn't likely to sell the rest of its stake in GM until the stock price gets better.

For NPR News, I'm Tracy Samilton in Ann Arbor.

Copyright ? 2011 National Public Radio?. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to National Public Radio. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Source: http://feedproxy.google.com/~r/NprProgramsATC/~3/A1uro_M0DbM/for-gm-its-good-news-and-bad-news

reuters news edible arrangements charles barkley nazareth michael savage