Automotive Rebound: Part II

In Part II, we look at the business models and dynamics of The Big Three. / Matt Horne

It TMs a new beginning for a new General Motors. Running leaner with fewer brands, less debt, and more affordable labor agreements, GM is poised for a bright future according to Dr. Tim Nash of Northwood University.

If you TMre General Motors, you TMre very happy. You had $155 billion in debt going into the bankruptcy. You come out and a lot of your debt has been forgiven under bankruptcy law. You have $55 billion in debt (now), Nash said.

The idea of bankruptcy was quite unpopular more than a year ago, along with the idea of government running GM and Chrysler. However analysts like Nash say it was quite beneficial, especially for GM.

You TMre a much leaner, competitive company because you have worked out agreements. You have much lower labor costs with unions, he said.

He said GM can be successful in a U.S. market that sells between 10-10.5 million new vehicles a year (a break even point); down from an average 16-16.5 million.

Chrysler also underwent Chapter 11 changes, in addition to joining forces with Fiat. However, Nash (a Chrysler driver himself), said there are issues with quality.

The quality is not yet of the globally competitive level that GM and Ford have achieved, he said. Change is not always easy, but at the Glass House (Ford World Headquarters) in Dearborn, it was profitable. Ford turned a $2 billion profit for the first quarter of 2010.

*Tune in Wednesday night at 6 and 11pm as we examine the new technology and new jobs coming to the auto industry.