After bankruptcy, GM, Chrysler turn the corner

By Steven Rattner
WashPost
Tuesday, June 1, 2010

We don't need an aircraft carrier and "Mission Accomplished" banner, but isn't it time to agree that the auto rescue has been a success? A year after the government-sponsored bankruptcies of GM and Chrysler, both patients are alive and progressing well toward recovery.

Two weeks ago, GM reported its first quarterly profit in nearly three years: net income of $865 million on $31.5 billion in sales. A month earlier, Chrysler's first-quarter report included the news that the company had turned cash-flow positive after nearly bleeding to death in 2008.

Both companies are also doing better in the marketplace. Market-share declines have been arrested. Bloated inventories on dealers' lots have been reduced dramatically. Use of sales incentives such as rebates and interest-free financing -- the cocaine of the auto industry -- has been substantially reduced.

And the prices that the cars are fetching have risen sharply since last year: by $2,500 for GM and $2,400 for Chrysler. That means that the companies' historically poor images -- brand equity, in industry parlance -- have begun to improve.

(More here.)