Lower costs and newer models help GM to survive in a shrunken market

DAN AKERSON, the boss of General Motors, will be spending plenty of time on the road over the next few days, hoping to persuade sceptical investors to cough up $13 billion in the carmaker’s initial public offering (ipo), expected later in the month. They have plenty of reason to be cautious, considering the hammering that share- and bondholders took during the firm’s two-month dash through the bankruptcy courts last year.

Nevertheless, Mr Akerson, a former telecoms boss, believes he has some strong selling-points. Having run up huge losses during some of the best times America’s auto industry ever had, GM is now showing solid profits in the midst of some of the industry’s worst years. On November 10th GM said it had made $2 billion between July and September—its third quarterly profit in a row—in a market that is struggling to reach annual sales of 11.5m, about 6m below its peak in the mid-2000s. Mr Akerson and his management team are suggesting that if sales continue to recover GM might be capable of annual pre-tax profits of up to $19 billion. Even if they do not reach previous peaks, the radical shake-up of GM imposed by its bankruptcy plan was designed to ensure that it stays in the black even at the Depression-era levels to which sales recently fell. …