Just a couple of years after the company's collapse into bankruptcy, GM's full-year income of $7.6 billion was remarkable. GM North America and GM International Operations (which includes China and Australia) posted solid profits after a year of increased sales that enabled GM to surpass Toyota (TM) to reclaim the title of global auto sales leader.
Also enhancing GM's bottom line was the company's improved pricing power. The company's much-improved recent products, like its acclaimed Chevy Cruze compact, can be sold at higher prices with fewer "cash back" incentives, leading to higher profits per sale.
Thanks in large part to the $50 billion government-assisted restructuring it received, and good management afterward, GM's U.S. operation is in good shape.
So now that GM is profitable, will it pay back Washington? Well, that depends on Europe.
Overseas Troubles Overshadow Strength at Home
In Europe, GM's subsidiary Adam Opel AG is beset by exactly the kinds of problems that troubled GM at home before the bailout. Too many factories, over-generous union contracts, and an infrastructure that is just too big and expensive have all contributed to more than a decade of losses.
Akerson replaced the leaders of GM Europe late last year and put several of his most-trusted lieutenants on Opel's board, including his right-hand man, Vice Chairman Steve Girsky. Girsky's assignment was to come up with a plan to fix Opel once and for all -- to fix its structure so that it could make profits even during lousy economic times, like now.
Executives said on Thursday that that plan would be announced in a few weeks. But everyone involved -- management, the unions, and the local governments in Europe -- all agree that big changes are necessary.
If successful, GM will be able to remove a huge thorn from its side and be set up for even bigger profits as economies improve around the world.
About That Bailout IOU
Technically speaking, GM already has "paid back" the bailout -- some of it in cash, the rest with GM stock. The problem is this: If the government sold its stock at current prices, it wouldn't quite recoup what it lent to GM during the economic crisis.
That's what commentators mean when they say that GM hasn't yet "paid back" taxpayers. In fact, the company has done exactly what it promised. But the stock price hasn't cooperated -- and that reflects badly on GM, particularly in comparison with rival Ford (F), which chose to borrow money privately instead of taking a government bailout.
Akerson, a former Navy officer, has said that he sees the task of steering GM back to glory as his patriotic duty. There's no question that he'd like to see the government make money on its investment in General Motors. His best bet for making that happen is to take actions that will raise the share price. Getting GM's U.S. operation straightened out was a good start. Now it's on to Europe.
Motley Fool contributor John Rosevear owns shares of General Motors and Ford. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford and General Motors, as well as creating a synthetic long position in Ford.