How do you lose $1,227 per vehicle? Volume Volume Volume.
Reuters is reporting G.M. Sold Lots of Cars and Lost $1,227 Each

  • General Motors lost an average of $1,227 for each vehicle in the first half of the year in North America, while its crosstown rival, the Ford Motor Company, lost $139, according to new research from Harbour Consulting.
  • “G.M. has two to three people sitting at home for every single person working today, and that has a huge legacy-cost impact on them,” Laurie A. Felax, vice president of Harbour Consulting, told an automotive conference on Monday. “It wipes away any profit that they have.”
  • By contrast, the three largest Japanese-owned automakers – Toyota, Honda and Nissan – all made well over $1,000 a vehicle in North America. Nissan’s profit averaged $1,826 a vehicle; Toyota $1,488; and Honda $1,203 in the first half of their 2005 fiscal year, Ms. Felax said.
  • Japanese automakers, which continue to gain United States market share, have high profit per vehicle because they have more efficient manufacturing operations and lower benefit costs for retired workers, Ms. Felax said.
  • The relatively new plants of the Japanese automakers in North America also have younger workers and a mostly nonunion work force.

General Motors is clearly not long term viable as we noted in GM Expectations just a few days ago. What’s holding up the stock then? Perhaps it’s people thinking the government will not let GM go under, perhaps it’s sheer silliness, perhaps in this yield starved world people playing for dividends think they can all get out in time before some sort of “event” happens.

Some people think that Kerkorian may be a white knight for GM.

His plan to inject $870 million into the automaker, increasing his stake to just under 9 percent, provided a vote of confidence in GM. “Kerkorian has a reputation for turning his investments into gold”.

Short term, Kerkorian did force up share prices by offering to buy GM shares well above market cost. With GM losing market share in North America and struggling as well to rein in crippling health care and pension costs, in the face of a very nasty consumer led recession coming up, I see it all as misguided hope.

Mike Shedlock / Mish/