February 6, 2012
By: Katie Little
Three years after receiving a government bailout, General Motors aims to raise its profit margin to 10 percent over the next several years. If it succeeds, its net income could rise to $10 billion or more — an outcome that Steven Rattner, former US Treasury auto advisor, said is not “a crazy ambition.”
The world’s top-selling automaker [GM 26.45 -0.25 (-0.94%) ] is on track to report net income of about $8 billion for 2011 — two years after undergoing a taxpayer-funded bankruptcy in 2009. GM releases results on February 15.
“As you know, we had a very strong January in the U.S., and I’m reasonably optimistic for the rest of the year, so $10 billion in net income is not a crazy ambition,” the former White House “car czar” told CNBC.
He added that the company has “enormous operating leverage” and as sales rise and as it maintains its pricing discipline, a “huge amount” of those incremental sales will drop to its bottom line.
Achieving a 10-percent margin would place General Motors at the top of the automaker league, Rattner said. While he said he is “delighted” that GM has set this goal, he cautioned it is not necessarily going to happen any time soon.