The City of Detroit is bankrupt but it is not the same with the car companies in it. The three biggest car makers in Detroit are far from being bankrupt. Ford Motor reported earning second quarter profit of $1.23 billion, which is up 19 percent despite getting heavy losses in Europe. The company said that the losses will be less this year compared to last year.
General Motors is set to release its second quarter report tomorrow. Analysts have estimated its results to be positive as well. The Chrysler Group said that it will have a net profit of $2.2 billion in the present fiscal year.
GM has been earning profits because it continues to bring out new products every year. The company is now at the early stages of a large new-model blitz. It has launched a redesigned Chevrolet Corvette and will be releasing new models of Chevy Silverado, GMC Sierra, Chevy Impala, and 15 other vehicles within the year. GM’s North American President Mark Reuss said that it is the biggest bunch of new models in the company’s history.
GM has one of the oldest lineups on the market last year. It will change once the company launches its new models. And consumers will definitely buy the new cars from GM, based on the success of the Cadillac ATS.
By this same period next year, GM will have the newest cars on the market. This is the reason why Goldman Sachs Group Inc. placed GM on the Americas Conviction Buy list, instead of Ford. The firm predicts that GM’s shares will increase to $45 in 2014 from the present mid to high $30s.
Ford and GM have been getting good profit margins. In North America last year, GM had a profit margin of 7.6 percent, while Ford had 10.4 percent. GM’s profit margin would grow more in the next year due to its plan to launch new versions of its cars and trucks in North America in the next three years.