Explaining Southern California's economy

GM posts record 2011 profit, with most coming from toughest auto market

Matthew DeBord

Don't think cool cars can some in small packages? No so. The new Chevy Sonic is proof that General Motors can finally do a tiny ride that commands attention.

Good news today for General Motors: it generated its highest annual profit ever in 2011. That's $7.6 billion. And yes, you read that first sentence right: highest annual profit ever. Higher than when GM owned half the U.S. market. Higher than when it was the largest industrial concern on the planet.

This is remarkable for two reasons, one obvious, one not. First the obvious: three years ago, GM had to be bailed out by the taxpayer before entering bankruptcy. It was under fierce attack in North America from Toyota and others. The future looked, if not completely dim, then not exactly luminous.

Now the not-obvious. Most of GM's 2011 profit came from North America. Some analysts have pointed to this as a problem and highlighted GM's struggles with its main European division, Opel, which it decided to hold on to rather than sell, post-Chapter 11. (Other observers, notably Slate's Matt Yglesias, have complained that all the rah-rah around GM suggests that America is still too close to the auto-industrial business model that built the country in the 20th century.)

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LA Auto Show: Do we have a theme yet?

LA-Auto-Show-Ext-MDB

Matthew DeBord

The 2011 LA Auto Show is in many ways more about what's going to happen with the car business in 2012.

Yesterday, on KPCC's AirTalk, I said that the 2011 LA Auto Show would be about the revival of the small car in America — by American automakers! — and the return of Detroit, after the worst couple of years in its history. You know, that whole bailout-bankruptcy thing.

The mood at the actual show is more one of expectation. On balance, while 2011 was a lot better than 2009, it was a dismal year by the historical standards of the auto industry. Even setting aside the major disruption of the Japanese earthquake and tsunami, which created a crisis in the global automotive supply chain, the industry is on track to sell only about 13 million new cars and trucks in the U.S. this year.

Contrast that with the 17 million it sold in 2005.

The hope is that the worst has passed and that 2012 will see the market return to something that more closely resembles normal, even it's a New Normal of around 14-15 million new cars sold in North America.

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