DETROIT – From July to September, GM, Ford and Chrysler racked up losses as large as the entire annual gross domestic product of the African nation of Malawi.
That’s $7.5 billion.
Despite the massive losses, company officials and some industry analysts say the Big Three can do little more than wait for drastic cost cuts to kick in and new products to take hold before they can staunch the bleeding.
All three reported third-quarter losses this week, with General Motors Corp. and DaimlerChrysler AG’s Chrysler Group joining the misery Wednesday.
A $1.5 billion quarterly loss at Chrysler prompted some industry analysts to question whether its parent company would put it up for sale, while GM touted its cost-cutting progress in reporting a $115 million net loss.
Ford Motor Co. on Monday reported a whopping $5.8 billion loss, much of it blamed on restructuring costs. Ford said its numbers will be worse in the fourth quarter. GM refused to predict when it will return to profitability.
In contrast, Tokyo-based Honda Motor Co. reported a profit Wednesday, although it was less than in the same period last year.
Chrysler has said it will make money in the fourth quarter. It had warned of the third-quarter loss earlier in the year as consumer tastes shifted away from its truck-dominated lineup to more fuel-efficient cars, many made by Asian competitors.
But it was bailed out by profits elsewhere as its parent company made $686 million, down from earnings of just over $1 billion a year earlier. The gain was fueled mainly by the $1.3 billion earned by the Mercedes Car Group. Overall sales fell 8 percent to $44.6 billion, hurt by a 26 percent decline at Chrysler.
Rebecca Lindland, an auto analyst at Global Insight, an economic research and consulting company, said the domestics have little choice but to stay the course.
“Rapid weight loss is not appropriate. They need to be on a steady plan of controlling costs and bringing out new products,” she said. “They’ve got long-term issues that aren’t going to be solved in the short term.”
At GM, the 20-cent-per-share loss was far smaller than the $1.7 billion, or $2.94 per share, that it lost in the third quarter of last year.
The world’s biggest automaker said that excluding special charges, it would have earned $529 million for the quarter.
In a conference call with reporters and analysts, Chief Financial Officer Fritz Henderson said GM is on target to reduce expenses by $9 billion on an annual basis this year. But it still isn’t satisfied with cost cuts or revenue gains, he said.
“In the end, our results are not satisfactory yet. So we are going to stay aggressive on the cost side, but at the same time, we need to execute in the market to really drive the turnaround as well,” he said.
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