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New GM is a 'powerhouse'

2010-01-11 08:12
Detroit - The post-bankruptcy General Motors is a "powerhouse" of an carmaker with a bright future and the capacity to achieve rich profits, vice chairman Bob Lutz said on Sunday.

"There were times in the past year or 18 months when it became perilously close to being over for GM but now, as this new decade begins, our future ain't what it used to be because it is in fact much, much brighter," Lutz said on the eve of the Detroit auto show.

"The new GM, in my view, is a powerhouse."

General Motors emerged from bankruptcy protection last year with radically lower fixed costs, an "essentially debt-free balance sheet," a "new and more competitive labor situation" an "outstanding" product portfolio and more focused after shedding four of its eight brands, Lutz said.

"We're finally in a position from a financial structure where we should be - at anything remotely resembling normal demand - we really should be solidly profitable," Lutz told the Society for Automotive Analysts' annual conference.

"It is kind of the phoenix rises from the ashes because this is the first time when we can deploy the full power of GM without the burden of all those horrible legacy cost and the crushing debt load that's all gone now. Now we're under a new ownership and a much, much healthier company."

GM has a depth of engineering experience that will allow it to lead in the development of alternative technologies such as electric and hydrogen powered vehicles, Lutz said.

Lutz expressed confidence at the upcoming launch of GM's plug-in electric hybrid the Volt and announced plans to manufacture a luxury version - the Cadillac Converj - sometime after 2012.

Lutz acknowledged that 2010 will be a challenging year and forecast that US vehicle sales will rise moderately to between 11m and 12m vehicles.

That's a significant improvement over the 10.4m vehicles sold in 2009 after vehicle sales fell 21% as a result of a broad economic downturn, but remains dramatically below the 15m to 17m vehicles sold in each of the past 15 years.

"I'm genuinely optimistic about the future," Lutz said, noting that a slew of economic indicators are showing a slow but real economic recovery and that the United States is adding two million new drivers every year.

"Detroit, the American auto industry and the Detroit auto show are going to experience in the next three to five years a prestige renaissance."

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