Home was where the hemorrhaging happened three years ago when two Detroit automakers headed for bankruptcy and a third suffered record losses. Now North America has become a money machine for the Detroit Three, which earned $4.5 billion there in the first quarter on surging U.S. sales.
General Motors Co. (GM) (GM), Ford (F) (F) Motor Co. and Chrysler Group LLC exceeded estimates with first quarter net income that totaled $3.2 billion. The most pleasant surprise was healthy North American operating margins of 11.5 percent at Ford, 7 percent at GM and 4.5 percent at Chrysler. Even combined losses of $405 million in Europe for GM and Ford were better than analysts anticipated from a region in an intractable financial crisis.
Such pleasant surprises would have been unimaginable in 2009 as GM and Chrysler filed Chapter 11 and Ford was coming off $30 billion in losses in the three previous years. Now with gasoline prices approaching $4 a gallon, U.S. car buyers are embracing fuel-efficient new offerings, such as the Ford Focus, Chevrolet Cruze and Chrysler 200. And Chrysler and Ford predict better days ahead as they roll out more new models this year.
“The indications for the remainder of the year continue to be absolutely positive,” Chrysler Chief Executive Officer Sergio Marchionne said on an April 26 conference call. Chrysler introduces the Dodge Dart compact car this quarter and the company is “expecting great volume” from that model through the rest of the year, he said.