General Motors trotted out preliminary financial results for the first time this morning since it sloughed off bad assets to the government and emerged from bankruptcy this summer: GM saw a net loss of $1.15 billion between July 10 and September 30 of this year, but ended the quarter with $42.6 billion in cash on hand (cash and marketable securities), according to the company’s reporting, which has not been audited and does not comply with GAAP standards.
Much of GM’s cash reserves have been earmarked for existing expenses, including payments to parts supplier Delphi, but as David Welch notes over on BusinessWeek, the automaker is now “closer to making money than it has been for years.” That milestone can’t come too soon for GM. The extended-range electric Chevy Volt, which GM gave a starring role in its financial viability plans, is now closing in on a late-2010 commercial launch that’s likely to be anything but a money-maker in the near term.
In addition, having ditched the Hummer, Subaru, Pontiac and Saturn brands, GM is banking on new models under the Chevrolet nameplate (including the Volt, the 40 MPG Cruze compact and the automaker’s first minicar, the Spark) to help boost sales.
GM said today the company will be able to start repaying government loans in December — more than five years ahead of schedule. Don’t expect the company to finish the year with a bang, however: GM anticipates negative cash flows in the fourth quarter of this year as it makes payments to Delphi, the governments of Canada, Ontario, the U.S. and Germany and continues restructuring. Plus, Dow Jones Newswires reports that while “GM’s spending on marketing and new-product development came to a virtual standstill during its bankruptcy proceedings,” the automaker plans to ramp up spending on advertising and engineering this year.
Lux Research analyst Jacob Grose told us this summer, on Day 1 of the New GM, he sees an “inherent contradiction” between the company’s very ambitious and expensive push to launch the Volt late next year and its relatively shaky bottom line.
But if the pervasive 230 MPG campaign GM rolled out for the Volt earlier this year provides any hints, we can expect the Volt — already an estimated billion-plus-dollar investment for the company — to get a fat slice of the automaker’s advertising budget in coming months, as it tries to cast a green glow across its lineup and gain an edge in segments where GM sees some of the highest growth potential: young and environmentally-motivated car buyers.