The Data behind the GM Record Profits Story
Intro to CommonlyQualified.com: On the Commonly Qualified Blog, I strive not just to give you another opinion about current Kansas and national stories, but to give you easy links to the rawest data available. I hope you use these links to educate yourself and form your own opinions. At the end of each article, I will tell you what conclusions I draw from the data, and I encourage you to tell me where I went wrong. I have an open mind and want to hear disagreements, but I don’t want just your opinion, I want data to back it up. If you can’t back up your opinion, then please keep it to yourself. Keep your comments civil and I’ll post them for the world to see. There will be no name calling, no matter how off you think I am.
The Story: On February 22, 2012 the media ran with stories that GM had records profits of $7.6 Billion (some reporting $9.2 Billion). Here is one of the stories. Like everyone, I want to believe that we are on our way out of this financial crisis, so I decided to look at the data and decide for myself instead of just adopting the opinions of others.
The Data: GM did have record profits $7.6. You can see their profits here on the GM Investor’s Site under net income. That’s pretty impressive. It’s up from profits of $4.7 Billion in 2010. That’s an increase of nearly 62%! Wow.
They must have sold a lot more cars…right? Let’s go looking and find out. From page 2 of GM’s annual report, we see that they sold roughly 9 million cars in 2011, compared to 8.4 million in 2010. That’s only an increase of 7%. How could their profit increase 62% while the number of cars they sold only went up 7%?
Maybe they sold each car for a lot more. Let’s look for the data. Well, it looks like they did sale them for more, but how much more? From that same page 2, we see that in 2010 then had $135.6 Billion in sales, and in 2011 they had $150.3 Billion in sales. That’s in increase of about 11%; far short of the 62% profit increase.
I guess we need to do some more digging to see where those profits came from. Here is their annual report (the same one we looked at above). On page 5 we find the numbers we’re looking for. At least $1.2 Billion of their profits came from non-car sales. Those profits were from sales of other investments, and misc accounting practices. In 2010 those non-car sales items accounted for a loss of 0.2 Billion, in 2011, they accounted for a profit of $1.2 Billion.
So what about all that money that General Motors got as part of the TARP Bailouts? Well, let’s go looking. Let’s go to the most original possible source; The US Department of Treasury. They have daily updates on the TARP programs available here. I’m looking at the most current data available as I write this: The 2/17/2012 Report. Looking at that report, we find GM down under “Other Programs”. As you go across that row of data, you’ll see that us tax payers have $4.44 billion in realized loss. You’ll also see that GM still owes us $23.39 billion…and they made $7.6 Billion in profit this year.
